This paper studies the aggregate implications of micro-level labor adjustment costs. Caballero and Engel (1993) find a dependence of aggregate employment growth on the cross sectional distribution of "employment gaps." This paper uses those results as moments in an indirect inference procedure...

This paper studies the dynamics of labor demand at the plant level to quantify labor adjustment costs. At the plant level, in contrast to time-series observations, the correlation of hours and employment growth is negative while hours and employment growth are about equally volatile. We specify...