Labor Hoarding and Inventories
نویسنده
چکیده
Labor hoarding is a widely believed empirical behavior of rms and a prominent explanation for procyclical labor productivity. Conventional wisdom attributes labor hoarding to labor adjustment costs. This paper argues that the conventional wisdom is inadequate for understanding labor hoarding because it ignores the role of inventories. Since idle labor can be used to produce inventories, why do rms hoard labor when inventory is an option? Using a dynamic rational expectations model of pro t-maximizing rms facing demand uncertainty, this paper studies the dynamic interactions between labor hoarding and inventory accumulation. Closed-form decision rules for labor and inventory decisions are derived. The analysis shows that labor adjustment costs alone are far from su¢ cient for explaining labor hoarding. JEL Classi cation: E22, E24, E32.
منابع مشابه
Nber Working Paper Series a Theory of Aggregate Supply and Aggregate Demand as Functions of Market Tightness with Prices as Parameters
This paper presents a parsimonious equilibrium business cycle model with trade frictions in the product and labor markets. The model features unemployment and unsold production and its general equilibrium can be represented very simply: as the intersection of an aggregate supply and an aggregate demand, with product market tightness acting as a price. The aggregate supply represents the expecte...
متن کاملP108: Prevalence of Obsessive Compulsive Hoarding and its Association with Intolerance of Uncertainty and Impulsivity
Hoarding is characterized by the persistent difficulty discarding or parting with possessions, regardless of the value others may attribute to these possessions. Hoarding resembles obsessive compulsive disorder (OCD) in several ways. The avoidance of and difficulties with discarding seem to be driven by fears of losing something significant or being responsible for a bad outcome. These could be...
متن کاملSeasonal Solow Residuals and Christmas: A Case for Labor Hoarding and Increasing Returns
In aggregate unadjusted data, measured Solow residuals exhibit large seasonal variations. Total Factor Productivity grows rapidly in the fourth quarter at an annual rate of 16 percent and regresses sharply in the ...rst quarter at an annual rate of ¡24 percent. This paper considers two potential explanations for the measured seasonal variation in the Solow residual: labor hoarding and increasin...
متن کاملA Theory of Aggregate Supply and Aggregate Demand as Functions of Market Tightness with Prices as Parameters
This paper presents a parsimonious equilibrium business cycle model with trade frictions in the product and labor markets. The model features unemployment and unsold production and its general equilibrium can be represented very simply: as the intersection of an aggregate supply and an aggregate demand, with product market tightness acting as a price. The aggregate supply represents the expecte...
متن کاملLabor Hoarding and the Business Cycle
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive o...
متن کامل