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Book part
Publication date: 8 April 2015

Jeff E. Biddle

The modern concept of labor hoarding emerged in early 1960s, and soon became a standard part of mainstream economists’ explanation of the working of labor markets. The…

Abstract

The modern concept of labor hoarding emerged in early 1960s, and soon became a standard part of mainstream economists’ explanation of the working of labor markets. The concept represents the convergence of three important elements: an empirical finding that labor productivity was procyclical; a framing of this finding as a “puzzle” or anomaly for the basic neoclassical theory of the firm, and a proposed resolution of the puzzle based on optimizing behavior of the firm in the presence of costs of hiring, firing, and training workers. This paper recounts the history of each of these elements, and how they were woven together into the labor hoarding concept. Each history involves people associated with various research traditions and motivated by an array of questions, many of which were unrelated to the questions that the modern labor hoarding concept was ultimately created to address.

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A Research Annual
Type: Book
ISBN: 978-1-78441-857-1

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Article
Publication date: 24 October 2018

Melchior Vella

This paper aims to test the hypothesis that the effect of production slowdown on labour demand can be muted by labour hoarding.

Abstract

Purpose

This paper aims to test the hypothesis that the effect of production slowdown on labour demand can be muted by labour hoarding.

Design/methodology/approach

This study adopts a production function approach, using data from Malta, a small state in the EU.

Findings

The results confirm the hypothesis and indicate that firms are normally prepared to employ and dismiss more workers in the long run than in the short run.

Practical implications

This finding has important implications for developed countries, including that labour hoarding can be of certain relevance in times of economic slowdown as shocks are absorbed by internal flexibility.

Originality/value

The results of this study add on to the existing literature in two ways. First, this study compares two industries –manufacturing and financial services– for which the former sector received support to hoard labour after the financial turmoil of 2008. Consequently, the dominance of labour hoarding in manufacturing relative to financial services is uncovered and the effect of hoarding practices on labour demand is estimated. Second, Malta is an interesting case because it is one of the smallest economies in the world and faces a high degree of vulnerability because of constraints associated with small size and insularity. As a result, firms adopt policy-induced measures to minimise adjustment costs.

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Journal of Economics, Finance and Administrative Science, vol. 23 no. 46
Type: Research Article
ISSN: 2077-1886

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Article
Publication date: 14 September 2018

John Sutherland

The purpose of this paper is to provide a human resource management perspective of the workforce adjustment strategies implemented at workplaces in Britain in response to…

Abstract

Purpose

The purpose of this paper is to provide a human resource management perspective of the workforce adjustment strategies implemented at workplaces in Britain in response to the Great Recession.

Design/methodology/approach

The analysis uses an ordered probit and a series of binomial probits to examine a micro data set from the 2011 Workplace Employment Relations Study.

Findings

Not all workplaces were affected equally by the recession. Not all workplaces chose to implement workforce adjustment strategies consequential of the recession, although the probability of a workplace taking no action decreased the greater the adverse effect of the recession on the workplace. Most workplaces used a combination of workforce adjustment strategies. Workplaces implemented strategies more compatible with labour hoarding than labour shedding, i.e., cutting/freezing wages and halting recruitment to fill vacant posts rather than making employees redundant.

Research limitations/implications

What was examined was the incidence of the workforce adjustment strategies, not the number of employees affected by the implementation of a strategy. Further, what was examined were outcomes. What is not known are the processes by which these outcomes were arrived at.

Originality/value

This paper concurs with the findings of previous economic studies that workplaces hoarded labour, cut hours and lowered pay. In so doing, however, it provides a more detailed and more informed human resource management perspective of these adjustment strategies.

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Evidence-based HRM: a Global Forum for Empirical Scholarship, vol. 7 no. 2
Type: Research Article
ISSN: 2049-3983

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Article
Publication date: 1 October 2004

Stuart Glosser and Lonnie Golden

Has the character of adjustment of labor input in the US manufacturing sector been changing over the last few decades? This question is addressed with time‐series…

Abstract

Has the character of adjustment of labor input in the US manufacturing sector been changing over the last few decades? This question is addressed with time‐series estimation using data through 2001. Impulse responses of employment and average weekly hours to a given shock in output demand are generated from multi‐equation vector autoregressions. The results reveal a marked change in the character of labor input adjustment as compared with the two decades prior to 1979, with some heterogeneity among 18 detailed industries. Adjustment of hours has risen somewhat while adjustment of employment has dropped considerably. This intensifying adjustment of hours vis‐à‐vis employment is consistent with hypotheses regarding employers' potential reactions to a skill‐upgrading of jobs under greater market pressures to restrain cost. US manufacturing employers appear to be increasingly adopting strategies of “lean staffing,” while “hoarding” and shedding work hours, in response to cyclical fluctuation in demand. This phenomenon may be a structural change contributing to a recent “jobless recovery” in the US.

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International Journal of Manpower, vol. 25 no. 7
Type: Research Article
ISSN: 0143-7720

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Book part
Publication date: 19 September 2014

Eirik Sjåholm Knudsen and Lasse B. Lien

The relevance of finance for strategy is probably never greater than during a recession. We argue that the strategy literature has been virtually silent on the issue of…

Abstract

The relevance of finance for strategy is probably never greater than during a recession. We argue that the strategy literature has been virtually silent on the issue of recessions, and that this constitutes a regrettable sin of omission. Recessions are also periods when the commonly held view of financial markets in the strategy literature – efficient, and therefore strategically irrelevant – is particularly misplaced. A key route to rectify this omission is to focus on how recessions affect investment behavior, and thereby firms’ stocks of assets and capabilities which ultimately will affect competitive outcomes. In the present chapter, we aim to contribute by analyzing how two key aspects of recessions, demand reductions and reductions in credit availability, affect three different types of investments: physical capital, R&D and innovation, and human- and organizational capital. We synthesize and conceptualize insights from finance- and macroeconomics about how recessions affect different types of investments and find that recessions not only affect the level of investment, but also the composition of investments. Some of these effects are quite counterintuitive. For example, investments in R&D are both more and less sensitive to credit constraints than physical capital is, depending on available internal finance. Investments in human capital grow as demand falls, and both R&D and human capital investments show important nonlinearities with respect to changes in demand.

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Finance and Strategy
Type: Book
ISBN: 978-1-78350-493-0

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Book part
Publication date: 10 December 1998

D.A.G. Draper

Abstract

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Explaining Unemployment: Econometric Models for the Netherlands
Type: Book
ISBN: 978-1-84950-847-6

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Book part
Publication date: 13 April 2011

Lutz Bellmann and Hans-Dieter Gerner

In Germany, the economic crisis 2008/09 was restricted to export-oriented industries such as automotive, chemistry, and mechanical engineering and hence to industries with…

Abstract

In Germany, the economic crisis 2008/09 was restricted to export-oriented industries such as automotive, chemistry, and mechanical engineering and hence to industries with a high proportion of qualified employees. Therefore, we expect the most current crisis to have a reversed effect on the relative earnings position between more and less qualified in contrast to a development that favored the more qualified since the beginning of the 1980s. Our empirical study is based on the Institute for Employment Research (IAB) Establishment Panel, a representative German establishment level panel data set that surveys information from almost 16,000 personal interviews with high ranked managers.

Despite the “German Job Miracle,” conditional difference-in-differences estimations to control for observed and unobserved heterogeneity reveal substantial employment reductions in establishments affected by the economic crisis. Falls in employment are strongest in plants with a relatively low proportion of qualified workers. Furthermore, our results indicate that the economic crisis is associated with a decline in wages, but only in those establishments that do not operate working time accounts. In sum, we do not find evidence for the current crisis having a reversed effect on the relative earnings position. Obviously once again, the higher qualified are better off than the lower qualified.

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Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution
Type: Book
ISBN: 978-0-85724-749-0

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Article
Publication date: 1 February 1980

K. Mayhew and B. Rosewell

Introduction This monograph examines developments in the British labour market during the 1970s and in particular the impact of the unusual combination of high inflation…

Abstract

Introduction This monograph examines developments in the British labour market during the 1970s and in particular the impact of the unusual combination of high inflation and high unemployment that characterised the period. The reasons for the current high rates of unemployment are examined, and government attempts to ameliorate the problem reviewed. A growing labour force will make the Government's task more difficult and the main trends in labour supply during the seventies are described; changes in differentials and in the dispersion of earnings are evaluated and the effects of inflation and incomes policies assesed. Finally we analyse perhaps the most important area for policy‐makers, developments in the collective bargaining structure and in the role of trade unions.

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Management Decision, vol. 18 no. 2
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 January 1976

G. BRISCOE and D.A. PEEL

Whilst it is generally agreed that the key determinant of the current money wage inflation is anticipated increases in prices, there remains a significant role for excess…

Abstract

Whilst it is generally agreed that the key determinant of the current money wage inflation is anticipated increases in prices, there remains a significant role for excess demand variables. Many of the studies on inflation which have appeared following the original expositions of the Phillips curve relationship have been concerned with producing efficient measures of excess demand variables. In the basic model developed by Phillips and Lipsey, the key determining variable of the rate of growth of money wages was taken to be the percentage rate of unemployment in the labour force. However, several recent contributors to the literature on this type of relationship have challenged the efficiency of the level of unemployment as a measure of excess demand for labour and specifically they have produced evidence which contradicts the central assumption of stability between unemployment and aggregate excess demand. In the U.K. it has been observed how since the end of 1966, Phillips type relationships between levels of unemployment and the rate of change of money wages appear to have broken down and apparent ‘discontinuities’ in the aggregate unemployment series have been noted. All these findings taken together with some earlier U.S. studies which found poor relationships between changes in wages and unemployment levels (see, for example, the discussion in) have concentrated attention on the search for superior measures of excess demand.

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Journal of Economic Studies, vol. 3 no. 1
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 19 October 2010

Enrico Marelli and Marcello Signorelli

The purpose of this paper is to identify the main “models of growth” characterising the EU countries in the last two decades, with particular reference to the…

Abstract

Purpose

The purpose of this paper is to identify the main “models of growth” characterising the EU countries in the last two decades, with particular reference to the employment‐productivity relationship, and to reveal the key determinants of productivity.

Design/methodology/approach

After a survey of the relevant literature, the empirical section analyses the “models of growth” by graphical inspection, identifying four models (for EU‐27 in the 1990‐2008 period): extensive, intensive, virtuous, and stagnant. Then different econometric investigations (beta convergence, dynamic panel with GMM estimation, fixed effects panel, cross‐section) are used to test the “diminishing returns of employment rate” hypothesis (for the 2000‐2006 period), to assess the convergence processes and to determine the key variables affecting productivity.

Findings

The main finding is the confirmation of the hypothesis mentioned: high employment growth is likely to lead to slower productivity growth. Moreover, besides verifying the beta convergence of productivity per worker, the most significant determinants of productivity are the following: education, a transition index, some structural indicators, and a “shadow economy” proxy. Finally, the descriptive analysis shows that “old” EU countries, coming from two decades of “jobless growth”, shifted to an “extensive” growth model; in contrast, transition countries (NMS) followed the opposite path: reducing employment and raising productivity.

Research limitations/implications

It would be advisable to extend the period of the analysis, as soon as new data become available.

Practical implications

The main policy implication is to get the EU Lisbon strategy – i.e. to create “more and better” jobs – working effectively.

Originality/value

The most original finding is the clear assessment of an employment‐productivity trade‐off. Also, the different models of growth are categorised simply and effectively.

Details

International Journal of Manpower, vol. 31 no. 7
Type: Research Article
ISSN: 0143-7720

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