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

65 Pages Posted: 8 May 2017

See all articles by Cosmin L. Ilut

Cosmin L. Ilut

Duke University

Matthias Kehrig

Duke University; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Martin Schneider

Stanford University

Multiple version iconThere are 4 versions of this paper

Date Written: April 04, 2017

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 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.

Keywords: business cycles, time varying volatility, asymmetric adjustment, skewness

JEL Classification: D200, D800, E200, J200

Suggested Citation

Ilut, Cosmin L. and Kehrig, Matthias and Schneider, Martin, Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (April 04, 2017). CESifo Working Paper Series No. 6414, Available at SSRN: https://ssrn.com/abstract=2964828

Cosmin L. Ilut

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

HOME PAGE: http://econ.duke.edu/~cli2/index.html

Matthias Kehrig (Contact Author)

Duke University ( email )

237 Social Sciences
Box 90097
Durham, NC 27708-0097
United States

HOME PAGE: http://sites.google.com/site/matthiaskehrig/research

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Martin Schneider

Stanford University ( email )

Stanford, CA 94305
United States

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