Firm-Level Shocks and Labour Flows.
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 su...
| Published in: | Economic Journal Vol. 131; no. 634; pp. 598 - 624 |
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| Main Authors: | , , |
| Format: | Article |
| Published: |
Oxford University Press / USA
Feb2021
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| Online Access: | View this record in EBSCOhost |
| Summary: | 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. |
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