Abstract
Rodrik [Rodrik, D., 1997. Has Globalization Gone Too Far? Institute for International Economics, Washington, DC.] argues that firms use the threat of moving to low-cost (generally developing) markets to make employment more flexible at home. Although a large literature documents significant adjustment costs in developed countries, we know little about their size and importance in developing countries that receive capital. We employ monthly Mexican data from the GATT-NAFTA period to estimate adjustment costs in Mexico. We consider adjustment costs for production and non-production workers and allow for asymmetry. While patterns of adjustment costs are similar as in developed countries, adjustment costs in Mexico are generally an order of magnitude smaller.
Original language | English (US) |
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Pages (from-to) | 29-54 |
Number of pages | 26 |
Journal | Journal of Development Economics |
Volume | 67 |
Issue number | 1 |
DOIs | |
State | Published - Jan 1 2002 |
Keywords
- Adjustment cost
- Asymmetry
- Dynamic labor demand
ASJC Scopus subject areas
- Development
- Economics and Econometrics