Journal of Political Economy Vol. 126 No. 5 2018
Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News
Abstract
Concave hiring rules imply that firms respond more to bad shocks than to good shocks. They provide a unified explanation for several seemingly unrelated facts about employment growth in macro- and microdata. In particular, they generate countercyclical movement in both aggregate conditional “macro” volatility and cross-sectional “micro” volatility, as well as negative skewness in the cross section and in the time series at different levels of aggregation. Concave establishment-level responses of employment growth to total factor productivity shocks estimated from census data induce significant skewness, movements in volatility, and amplification of bad aggregate shocks.
- DOI
- 10.1086/699189
- Volume
- 126
- Issue
- 5
- Pages
- 2011-2071
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref