A Time Series Analysis of Layoff Rates

Abstract

This study attempts to shed some light on labor market behavior by examining layoff rates. Multiple regressions are employed to estimate layoff rate functions for 20 manufacturing industries using quarterly data. Some industries are found to postpone layoffs in the face of falling demand by at least a quarter period. Many industries apparently adjust their layoff rates to take account of the probability of rehiring their own employees. This behavior is likely to be associated with the degree of specific training that employees have. It represents a potential impediment to countercyclical policy measures.