Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants

Marcela Eslava; John Haltiwanger; Adriana D. Kugler; Maurice Kugler

doi:10.1162/rest.2010.11470

Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants

Marcela Eslava¹; John Haltiwanger²; Adriana D. Kugler^3,4; Maurice Kugler

¹ Universidad de Los Andes · ² University of Maryland, NBER, and IZA · ³ Center for Economic and Policy Research · ⁴ University of Houston

The Review of Economics and Statistics 2010

We analyze nonlinear adjustments of capital and labor using plant data from the Colombian Annual Manufacturing Survey, allowing for interdependence in adjustments of the two factors. We find nonlinear employment and capital adjustments. We also find that capital shortages reduce hiring, and labor surpluses reduce capital shedding. Moreover, we find that job destruction and capital formation increased after factor market deregulation in Colombia. Finally, we find that completely eliminating frictions in factor adjustment would yield a substantial increase in aggregate productivity through improved allocative efficiency, but that the actual impact of the Colombian deregulation on productivity was modest.

DOI: 10.1162/rest.2010.11470
Volume: 92 (2)
Pages: 378-391
Language: en
Export: BibTeX
Sources: openalex crossref