Uncertainty and the Employment Dynamics of Small and Large Businesses

Vivek Ghosal () and Yang Ye

No 5059, CESifo Working Paper Series from CESifo

Abstract: We examine the impact of uncertainty on employment dynamics. Alternative measures of uncertainty are constructed based on the survey of professional forecasters, and regression-based forecasting models for GDP growth, inflation, S&P500 stock price index, and fuel prices. Our results indicate that greater uncertainty has a negative impact on growth of employment, and the effects are primarily felt by the relatively smaller businesses; the impact on large businesses are generally non-existent or weaker. Our results suggest that to truly understand the effects of uncertainty on employment dynamics, we need to focus on the relatively smaller and entrepreneurial businesses. We discuss implications for the framing of economic policy.

Keywords: uncertainty; employment; small businesses; entrepreneurship; real-options; financing-constraints (search for similar items in EconPapers)
JEL-codes: D80 G10 L11 L40 O30 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Uncertainty and the employment dynamics of small and large businesses (2015)
Working Paper: Uncertainty and the Employment Dynamics of Small and Large Businesses (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5059

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