Congestion in Onboarding Workers and Sticky R&D

Justin Bloesch and Jacob Weber ()

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

Abstract: R&D investment spending exhibits a delayed and hump-shaped response to shocks. We show in a simple partial equilibrium model that rapidly adjusting R&D investment is costly if the probability of converting new hires into productive R&D workers (“onboarding”) is decreasing in the number of new hires (“congestion”). Congestion thus causes R&D-producing firms to slowly hire new workers in response to good shocks and hoard workers in response to bad shocks, providing a microfoundation for convex adjustment costs in R&D investment. Using novel, high-frequency productivity data on individual software developers collected from GitHub, a popular online collaboration platform, we provide quantitative evidence for such congestion. Calibrated to this evidence, a sticky-wage new Keynesian model with heterogeneous investment-producing firms subject to congestion in onboarding and no other frictions yields hump-shaped responses of R&D investment to shocks.

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: 74
Date: 2023-11-01
New Economics Papers: this item is included in nep-mac and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:97288

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DOI: 10.59576/sr.1075

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