Keywords: Capital investment, employment adjustment, capacity utilization, productivity, learning effects, specific training
Abstract: This paper provides a description of the dynamic choices of manufacturing plants
when they undertake rapid adjustment in output. The focus is on episodes that
involve lumpy adjustment in capital or employment. I examine the behavior of variables
such as capital utilization, hours per worker, overtime use, capacity utilization,
materials and energy use. Finally I describe the observed patterns of productivity
during those adjustment episodes and propose some hypotheses that seem to fit them.
The costs associated with output adjustment seem to arise from building and destroying
a particular organization of the structure of production and associated worker
experience. As such they are related to learning-by-doing and investment in specific
Full paper (463 KB PDF)
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Last update: February 13, 2001