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Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News
Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News
Working Paper Number CES-17-15
Abstract
Concave hiring rules imply that firms respond more to bad shocks than to good shocks. They provide a united explanation for several seemingly unrelated facts about employment growth in macro and micro data. 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 level of aggregation. Concave establishment level responses of employment growth to TFP shocks estimated from Census data induce significant skewness, movements in volatility and amplification of bad aggregate shocks.
Page Last Revised - October 8, 2021
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