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

62 Pages Posted: 15 Sep 2014 Last revised: 11 Jun 2023

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: September 2014

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 levels 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.

Suggested Citation

Ilut, Cosmin L. and Kehrig, Matthias and Schneider, Martin, Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (September 2014). NBER Working Paper No. w20473, Available at SSRN: https://ssrn.com/abstract=2496230

Cosmin L. Ilut (Contact Author)

Duke University ( email )

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

Matthias Kehrig

Duke University ( email )

237 Social Sciences
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Durham, NC 27708-0097
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HOME PAGE: http://sites.google.com/site/matthiaskehrig/research

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Martin Schneider

Stanford University ( email )

Stanford, CA 94305
United States

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