Firms' relative sensitivity to aggregate shocks and the dynamics of gross job flows

Eugénio Pinto
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Eugénio Pinto: https://www.federalreserve.gov/econres/eugenio-pinto.htm

No 2009-02, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We propose a measure for the importance of aggregate shocks for fluctuations in job flows at the firm level. Using data for the Portuguese economy, we find that large and old firms exhibit higher relative sensitivity to aggregate shocks and have a disproportional influence over the dynamics of aggregate job reallocation. In the overall economy, since large and old firms reallocate jobs less procyclically than small and young firms, job reallocation is less procyclical than if firm size and age classes were equally sensitive to aggregate shocks. A similar result applies in the manufacturing and the transportation and public utilities sectors. However, in the services and retail trade sectors the reallocation patterns are more similar across firm size and age, likely reflecting the expansion of existing and the creation of new industries. We conclude that large and old firms seem relatively more important to assess the state of the business cycle.

Keywords: Labor market; Employment (Economic theory) (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-bec
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