CEU Electronic Theses and Dissertations, 2010
| Author | Nastasoiu, Alina |
|---|---|
| Title | The Costs of Net Labor Adjustments in Romania |
| Summary | The downsizing in the large manufacturing plants and the growth of the private sector during the transition in Romania were both accompanied by reorganizations and large adjustments in the labor force. This paper attempts to estimate the size and structure of the labor adjustment costs at firm level, by assuming a model of the labor adjustment similar with the “q” models of investments with adjustment costs. The first order conditions of the model that show the optimal level of downward and upward adjustments are estimated with the Heckman correction to take into account the sample bias induced by the firm-year observations that do not make any change in the number of employees. The adjustment cost function comprises different fixed, linear and quadratic parameters for the upward and downward adjustment and the results are estimated separately for 9 manufacturing sectors between 1994 and 2001. The findings show that the only relevant parameter for the upward adjustment is the linear one, while in the case of the downward adjustment all the parameters are statistically significant, but the estimated linear parameter is negative in all the industries. However, compared with the yearly wage bill, the estimated adjustment costs (benefits) are negligible, suggesting that the rigidity of the Romanian transition does not lie in the labor market. |
| Supervisor | Earle, John |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2010/nastasoiu_mihaela-alina.pdf |
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