Work

Firm-Level Shocks and Labour Flows

Year: 2020

Type: article

Abstract: We analyse how labour flows respond to permanent idiosyncratic shifts in firm-level production functions and demand curves using very detailed Swedish micro data. Shocks to firms’ physical productivity have only modest effects on firm-level employment decisions. In contrast, we document rapid and substantial employment adjustments through hires and separations in response to firm-level demand shocks. The choice of adjustment margin depends on the sign of the shock: firms adjust through increased hires if these shocks are positive and through increased separations if the shocks are negative.

Source: The Economic Journal

DOI: 10.1093/ej/ueaa087

Authors: Mikael Carlsson, Julián Messina, Oskar Nordström Skans

Institutions: Uppsala University, Swedish National Bank, Inter-American Development Bank, IZA - Institute of Labor Economics, Institute for Evaluation of Labour Market and Education Policy

Language: English

Topic: Labor market dynamics and wage inequality

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,463