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Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants. IZA Discussion Papers 1751. (2005)
| Citations: | 30 - 7 self |
BibTeX
@MISC{Eslava05factoradjustments,
author = {Marcela Eslava and John Haltiwanger and Adriana Kugler and Maurice Kugler and Esther Duflo and Josh Angrist and Orazio Attanasio and Eli Berman and Ernst Berndt and Nick Bloom and Ricardo Caballero and Ken Chay and Eduardo Engel and Penny Goldberg and Rachel Griffith and Dan Hamermesh and Charles Hulten and Norman Loayza and Steve Pischke and Luis Serven and Jagadeesh Sivadasan and Chad Syverson and John Van Reenen},
title = {Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants. IZA Discussion Papers 1751.},
year = {2005}
}
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Abstract
Abstract We analyze employment and capital adjustments using plant data from the Colombian Annual Manufacturing Survey. We estimate adjustment functions for capital and labor as a non-linear function of the gaps between desired and actual factor levels, allowing for interdependence in adjustments of the two factors. In addition to non-linear employment and capital adjustments in response to market fundamentals, we find that capital shortages reduce hiring and labor surpluses reduce capital shedding. We also find that after factor market deregulation in Colombia in 1991, factor adjustment hazards increased on the job destruction and capital formation margins. Finally, we find that completely eliminating frictions in factor adjustment would yield a substantial increase in aggregate productivity through improved allocative efficiency. Yet, the actual impact of the Colombian deregulation on aggregate productivity through factor adjustment was modest.
