The Costs of Hiring and Separations

35 Pages Posted: 24 Apr 1998 Last revised: 6 Oct 2010

See all articles by John M. Abowd

John M. Abowd

U.S. Census Bureau; Cornell University Department of Economics; Labor Dynamics Institute; School of Industrial and Labor Relations; NBER (on leave); CREST; IZA Institute of Labor Economics

Francis Kramarz

Independent

Date Written: July 1997

Abstract

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.

Suggested Citation

Abowd, John Maron and Kramarz, Francis, The Costs of Hiring and Separations (July 1997). NBER Working Paper No. w6110. Available at SSRN: https://ssrn.com/abstract=62688

John Maron Abowd (Contact Author)

U.S. Census Bureau ( email )

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Francis Kramarz

Independent

No Address Available

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