This study proposes a specific channel through which labor markets facilitate firm growth: the occupational alignment between an establishment’s workforce and local skills. Using occupational employment statistics, we construct an index that compares each establishment’s occupational mix to that of its local market. Establishments with higher alignment grow faster in sales and employment. This growth comes primarily through lower adjustment costs and higher capital investment. We also show that the effects are most pronounced in establishments with a higher share of skilled workers and industries with higher idiosyncratic cash flow risk. This employee–firm matching channel helps explain how local labor markets translate into competitive advantage.

We examine the effects of investor disagreement on price discovery using a recurring public information event in the highly liquid crude oil futures market, a market free of short sale constraints. We show that prices reflect positive news within one-half second of trading but continue to drift for five minutes when news is negative. Evidence suggests the drift arises from a systematic surge in buying pressure that impedes the price discovery process when news is negative. Our results are consistent with price drift arising from differences in trading horizons, where traders taking long positions condition trades on information beyond the news.