Output Fluctuations and Firm Recruitment Effort

Jesper Bagger (), Francois Fontaine (), Manolis Galenianos and Ija Trapeznikova ()
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Jesper Bagger: University of Edinburgh
Francois Fontaine: Paris School of Economics
Manolis Galenianos: University of London
Ija Trapeznikova: Royal Holloway, University of London

No 18068, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the relationship between output fluctuations and firms’ recruitment efforts using Danish data that link online job ads with high-frequency firm-level revenue and value-added. While overall output growth is weakly correlated with advertisement rates, decomposing output into permanent and transitory components reveals a strong link between persistent shocks and recruitment effort. A one standard deviation permanent shock raises advertisement rates by 10-16% of a standard deviation, whereas transitory shocks show no significant effect. These results highlight the importance of shock persistence in labor demand and offer empirical support for dynamic search-and-matching models of the labor market.

Keywords: value-added growth; revenue growth; output growth; online job advertisements; vacancies; permanent and transitory shocks (search for similar items in EconPapers)
JEL-codes: J23 J63 (search for similar items in EconPapers)
Date: 2025-08
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