Finance and Economics Discussion Series (FEDS)
February 2001
Patterns of Plant Adjustment
Plutarchos Sakellaris
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 training.
Keywords: Capital investment, employment adjustment, capacity utilization, productivity, learning effects, specific training
PDF: Full Paper
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