R&D, Market Power, and the Cyclicality of Employment

Uluc Aysun, Melanie Guldi, Adam Honig and Zeynep Yom

Journal of Money, Credit and Banking, 2025, vol. 57, issue 1, 151-184

Abstract: This paper provides a first look into the joint effects of research and development (R&D) and market power on the cyclicality of employment. It presents a theoretical model with R&D and monopolistically competitive firms which shows that firms smooth their R&D activities when they face large R&D adjustment costs. This smoothing behavior comes at the expense of higher labor volatility, and it is stronger for firms with high R&D intensity and low market power. Firm‐level data support these predictions. Dynamic panel estimations reveal that employment at competitive firms engaging in a high level of R&D is more procyclical.

Date: 2025
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https://doi.org/10.1111/jmcb.13091

Related works:
Working Paper: R&D, Market Power and the Cyclicality of Employment (2020)
Working Paper: R&D, Market Power and the Cyclicality of Employment (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:57:y:2025:i:1:p:151-184

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