The Estimation of Asymmetric Adjustment Costs for the Number of Workers and Working Hours |Empirical Evidence from Japanese Industry Data

In this paper, we investigate the asymmetry of adjustment costs for labour. Using monthly data on Japanese industries, we estimate a model of dynamic labour demand that incorporates adjustment costs for hiring and firing workers, and for changing working hours. Our estimates suggest the following. (1) It is more costly to fire workers than to hire them in all industries. (2) This asymmetry between hiring and firing costs is more important for production sectors than for non-production sectors. (3) It is much less costly to adjust working hours than to adjust the number of workers.