Shiftwork, Adjustment Costs and Uncertainty

I study the dynamics of shiftwork when the demand for the output of the firm is stochastic and adjusting the number of shifts entails irreversible costs. The analysis reveals the existence of a gap between the level of demand that triggers activation of a shift and the level of demand that triggers shutting off this shift. The higher the uncertainty about future demand, the wider this gap. I use plant level data to demonstrate this gap. I also analyze in detail the pro-cyclical labor productivity created by the use of shiftwork