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

Cosmin Ilut, Matthias Kehrig and Martin Schneider

No 150113, Department of Economics Working Papers from The University of Texas at Austin, Department of Economics

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 sufficiently concave to induce significant skewness as well as movements in volatility of employment growth.

Keywords: business cycles; time varying volatility; asymmetric adjustment; skewness (search for similar items in EconPapers)
JEL-codes: D2 D8 E2 J2 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2014-06, Revised 2014-12
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (2018)
Working Paper: Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (2017)
Working Paper: Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (2017)
Working Paper: Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (2015)
Working Paper: Slow to Hire, Quick to Fire: Employment Dynamics with Asymmetric Responses to News (2014)
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