Employment Adjustment at the Firm Level. A Theoretical Model and an Empirical Investigation for West German Manufacturing Firms

24 Pages Posted: 16 Dec 2002

See all articles by Werner Smolny

Werner Smolny

Ruhr Universit├Ąt Bochum - Faculty of Economics

Abstract

In this paper, employment adjustment at the firm level is estimated with a large panel of business survey data from West German manufacturing. The specification is based on a framework of monopolistic competition in the product market. Special emphasis is devoted to the analysis of the impact of demand uncertainty, capacity constraints, technological change and competition. The empirical results reveal that demand uncertainty and capacity constraints significantly affect employment adjustment. Innovative firms are more successful; they increase employment and exhibit a higher utilization of capacities. Employment adjustment also depends on competition. In monopolistic markets, the volatility of employment is higher.

Suggested Citation

Smolny, Werner, Employment Adjustment at the Firm Level. A Theoretical Model and an Empirical Investigation for West German Manufacturing Firms. Labour, Vol. 16, pp. 65-88, 2002. Available at SSRN: https://ssrn.com/abstract=309285

Werner Smolny (Contact Author)

Ruhr Universit├Ąt Bochum - Faculty of Economics ( email )

Ruhr University of Bochum
Faculty of Economics
D-44780 Bochum, DE 44780
Germany
0234 32 28341 (Phone)
0234 32 14273 (Fax)

HOME PAGE: http://www.ruhr-uni-bochum.de/agvwp1/Team/aktuellLebenslauf.htm

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