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Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News

January 2015

Working Paper Number:

CES-15-02

Abstract

We study the distribution of employment growth when hiring responds more to bad shocks than to good shocks. Such a concave hiring rule endogenously generates higher moments observed in establishment-level Census data for both the cross section and the time series. In particular, both aggregate conditional volatility ("macro-volatility") and the cross-sectional dispersion of employment growth ("micro-volatility") are countercyclical. Moreover, employment growth is negatively skewed in the cross section and time series, while TFP is not. The estimated response of employment growth to TFP innovations is su ciently concave to induce signi cant skewness as well as movements in volatility of employment growth.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

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:
economist, macroeconomic, quarterly, employ, labor, endogenous, recession, shift, employment growth, trend, forecast, unobserved, hiring, econometrician, hire, increase employment, employment dynamics, exogenous, volatility, shock, employment distribution

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:
Census of Manufactures, Annual Survey of Manufactures, Bureau of Labor Statistics, Total Factor Productivity, National Bureau of Economic Research, Bureau of Economic Analysis, Longitudinal Business Database, IQR, Census of Manufacturing Firms, Generalized Method of Moments, North American Industry Classification System, NBER Summer Institute

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