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Large Firms and the Cyclicality of US Labour Productivity

Joshua Brault and Hashmat Khan ()

No 21-02, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We present novel stylized facts on the declining cyclicality of labour productivity for large firms. Changes in their output-labour productivity correlations are close to those observed in the aggregate data, unlike small firms. We find support for the hypothesis that this change is driven by increased labour market flexibility. In response to a 1% increase in real sales large firms’ hire an additional 75 workers in the pre-1985 period, compared to an additional 90 workers in the post-1985 period. Our findings are of direct relevance to the growing literature on the role of large firms in driving US business cycles.

Keywords: Large Firms; Labour Productivity; Business Cycles (search for similar items in EconPapers)
JEL-codes: D22 E24 E32 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-03-13, Revised 2021-05-27
New Economics Papers: this item is included in nep-bec, nep-eff and nep-mac
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Published: Carleton Economics Papers

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