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- Title
Turnover and the Dynamics of Labour Demand.
- Authors
Hamermesh, Daniel S.; Pfann, Gerard A.
- Abstract
This article derives a profit-maximizing path of labor demand using a generalized asymmetric adjustment function including costs of changing employment and of hiring or firing employees. It examines models of dynamic labor demand and account for variations in voluntary labor mobility (job quitting) that are linked to net changes in employment. The aim of the study is to test whether at the aggregate level a simple model of homogenous labor in firms facing identical adjustment cost functions can add to one's ability to track and understand the timing of aggregate employment fluctuations. This is, of course, identical to what has actually been done throughout the huge literature examining the dynamics of aggregate labor demand, though it is recognized explicitly that nothing may be learned about behavior at the micro level. That this extension could be important is demonstrated by a figure, which illustrates, for United States manufacturing for 1960-81, the cyclicality of the quit rate by presenting it along with the logarithm of the level of employment. The rate of quitting is substantial, and the quit rate is highly cyclical, tracking employment quite closely.
- Subjects
UNITED States; LABOR demand; LABOR mobility; LABOR turnover; EMPLOYMENT; LABOR market; LABOR costs
- Publication
Economica, 1996, Vol 63, Issue 251, p359
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2555011