Abstract
This paper develops a model of the firm that focuses on inventory and labor turnover behavior. The key features are: First, the firm uses both inventories and the attached workforce to buffer demand and cost shocks. Second, the firm engages in multiperiod labor contracts with its workers which permit distinctions between temporary and permanent workforce adjustments. The model is consistent with several features of the business cycle, including the observed high volatility of output relative to sales and of employment.
We are grateful to Geoffrey Heal and the participants of the conference for helpful comments and to the National Science Foundation for financial support.
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© 1994 Springer-Verlag Berlin Heidelberg
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Haltiwanger, J.C., Maccini, L.J. (1994). Inventories and Multi-Period Labor Contracts: Implications for Business Cycle Analysis. In: Fiorito, R. (eds) Inventory, Business Cycles and Monetary Transmission. Lecture Notes in Economics and Mathematical Systems, vol 413. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-46806-3_7
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DOI: https://doi.org/10.1007/978-3-642-46806-3_7
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