The Costs of Hiring and Separations
John M. Abowd
Cornell University Department of Economics; Labor Dynamics Institute; School of Industrial and Labor Relations; National Bureau of Economic Research (NBER); CREST; Institute for the Study of Labor (IZA)
National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
NBER Working Paper No. w6110
In this article, we estimate the costs of hiring, separation, and retirement of employees for a representative sample of French establishments in 1992. The estimates are computed using data from three sources: the Wage Structure Survey (ESS), the Workforce Movement Questionnaire (DMMO), and the Occupational Structure Survey (ESE). We show that the estimated costs are generally asymmetric (hiring is cheaper than terminations), increasing, and concave functions of the number of entries or exits (either retirements or terminations). There is a fixed component to each of these costs that is related to the structure of the firm's personnel department. Our estimates imply that firms should not adjust gradually to the desired level of employment.
Number of Pages in PDF File: 35working papers series
Date posted: April 24, 1998
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