Using linked employer-employee data to investigate the speed of adjustments in downsizing firms
May 2006
Working Paper Number:
tp-2006-03
Abstract
When firms are faced with a demand shock, adjustment can take many forms. Firms can adjust
physical capital, human capital, or both. The speed of adjustment may differ as well: costs of
adjustment, the type of shock, the legal and economic enviroment all matter. In this paper, we
focus on firms that downsized between 1992 and 1997, but ultimately survive, and investigate how
the human capital distribution within a firm influences the speed of adjustment, ceteris paribus. In
other words, when do firms use mass layoffs instead of attrition to adjust the level of employment.
We combine worker-level wage records and measures of human capital with firm-level characteristics
of the production function, and use levels and changes in these variables to characterize
the choice of adjustment method and speed. Firms are described/compared up to 9 years prior to
death. We also consider how workers fare after leaving downsizing firms, and analyze if observed
differences in post-separation outcomes of workers provide clues to the choice of adjustment speed.
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:
payroll,
census data,
census research,
survey,
employee,
employ,
employed,
labor,
longitudinal,
economic census,
workforce,
employment production,
employment dynamics,
declining,
decline,
layoff,
census bureau,
employer household,
aging,
longitudinal employer,
research census,
census linked
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National Science Foundation,
Cornell University,
Economic Census,
Research Data Center,
Alfred P Sloan Foundation,
Longitudinal Employer Household Dynamics,
LEHD Program,
Business Register Bridge
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