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Cambridge Journal of Economics Advance Access originally published online on February 7, 2005
Cambridge Journal of Economics 2005 29(4):535-557; doi:10.1093/cje/bei006
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© The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Is labour becoming more or less flexible? Changing dynamic behaviour and asymmetries of labour input in US manufacturing

Stuart Glosser and Lonnie Golden*

* University of Wisconsin at Whitewater, and Penn State University, Abington College, respectively

Address for correspondence: Lonnie Golden, Division of Social Sciences, Penn State University, Abington College, Abington PA, 19001, USA; email Lmg5{at}psu.edu.

Have employment and hours become more flexible over time? Vector auto-regressions are estimated using monthly time-series data to generate impulse responses, which reflect the dynamic response of employment and average hours of labour input following a given shock in output demand. A marked change in the US manufacturing sector occurred after 1979. Although there is heterogeneity by industry and asymmetry over the business cycle, hours have become somewhat more and employment considerably less flexible, particularly during expansion phases. Employers are apparently delaying hiring and relying more on using hours as a buffer to absorb fluctuations in output demand.

Key Words: Hours of work • Employment adjustment • Labour flexibility • Labour markets • VARs

JEL classifications: J2, J4, E3

Manuscript received September 18, 2001; final version received August 13, 2003.


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