College of Behavioral & Social Sciences
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Item Heterogeneity and Input Reallocation(2006-08-07) Pinto, Eugenio; Haltiwanger, John; Shea, John; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, we analyze some patterns of aggregate job reallocation that are significantly determined by the coexistence of heterogeneous businesses in any industry. First, we argue that the interaction of non-strictly convex adjustment costs and learning about true efficiency can explain the significant growth of survivors in a cohort of entering firms. Using Portuguese data we find evidence that survivors are the main source of growth in the cohort's average size, and that their contribution varies across sectors. By simulation, we show that we need adjustment costs to match this evidence with a selection model of industry dynamics. In a calibration of the model, we find that proportional costs and the fixed exit cost are key parameters in matching the evidence, and that firms in manufacturing learn relatively less initially about their efficiency, and are subject to much larger adjustment costs than firms in services. Second, we analyze how does structural heterogeneity across classes of firms affects the cyclical behavior of aggregate job flows. We find that types of firms whose optimal employment is relatively more determined by aggregate shocks than by idiosyncratic shocks influence the dynamics of aggregate job flows by more than they affect average aggregate flows. In Portuguese data, we conclude that large and old firms tend to affect aggregate dynamics by more than their already large employment shares would suggest. This tends to make job reallocation less procyclical than otherwise, and affects aggregate behavior in some sectors. Finally, as a background for the empirical analysis that is used in this dissertation, we analyze basic facts about the business cycle and gross job flows in Portugal from 1986 to 2000. We conclude that gross job flows are large and react in predictable ways to the business cycle and that patterns of job reallocation vary widely across sectors and firm's age and size.Item Essays on Factor Adjustment Dynamics(2006-08-25) Contreras, Juan M; Rust, John P; Haltiwanger, John C; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This study analyzes dynamic production input factor decisions using the annual Census of Manufacturing firms from Colombia and monthly production data from a glass mould firm. It proposes a model able to explain the mix of smooth and lumpy adjustment and both the static and dynamic interrelation in capital and employment adjustment observed in these datasets. The key points of the explanation are the joint analysis of capital and employment adjustment and the existence of adjustment costs for capital and labor. These adjustment costs take the form of disruption in the production process and reallocation of internal resources, lagged in the adjustment represented by a convex cost function, fixed costs and congestion effects, meaning that it is more costly for firms to adjust simultaneously capital and employment. The study uses a structural approach and a simulated minimum distance algorithm to estimate the adjustment cost parameters in the case of the Census of Manufacturing Firms and a calibration procedure to explore the fit of the model in the specific case of the glass mould firm.