Congestion in Onboarding Workers and Sticky R&D

Justin Bloesch () and Jacob Weber ()
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Justin Bloesch: https://www.ilr.cornell.edu/people/justin-bloesch

No 1075, Staff Reports from Federal Reserve Bank of New York

Abstract: Adjusting the rate of R&D spending is costly if the probability of converting new hires into productive R&D workers (“onboarding”) is decreasing in the number of hires (“congestion”). We show that such congestion induces R&D-producing firms to hire slowly in response to good shocks, and hoard workers in response to bad shocks, providing a microfoundation for the convex adjustment costs widely used to capture the delayed, hump-shaped response of R&D spending to shocks. Using novel, high-frequency productivity data on individual software developers collected from GitHub, we document quantitative evidence suggesting that congestion is an economically-significant feature of R&D investment production.

Keywords: intangibles; monetary policy; R&D; innovation; team specific capital; labor adjustment costs (search for similar items in EconPapers)
JEL-codes: E22 O36 (search for similar items in EconPapers)
Pages: 84
Date: 2023-11-01
New Economics Papers: this item is included in nep-mac and nep-tid
Note: Revised October 2026.
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DOI: 10.59576/sr.1075

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