R&D, Market Power and the Cyclicality of Employment

Uluc Aysun, Melanie Guldi, Adam Honig () and Zeynep Yom
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Adam Honig: Department of Economics, Amherst College

No 47, Villanova School of Business Department of Economics and Statistics Working Paper Series from Villanova School of Business Department of Economics and Statistics

Abstract: This paper provides a first look into the joint effects of research and development (R&D) and market power on the cyclicality of employment. It presents a theoretical model with R&D and monopolistically competitive firms which shows that firms smooth their R&D activities when they face large R&D adjustment costs. This smoothing behavior comes at the expense of higher labor volatility, and it is stronger for firms with high R&D intensity and low market power. Firm-level data support these predictions. Dynamic panel estimations reveal that employment at competitive firms engaging in a high level of R&D is more procyclical.

Keywords: R&D; employment volatility; firm-level data; COMPUSTAT (search for similar items in EconPapers)
JEL-codes: E30 E32 O30 O33 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-com, nep-mac, nep-sbm and nep-tid
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http://repec.library.villanova.edu/workingpapers/VSBEcon47.pdf (application/pdf)

Related works:
Journal Article: R&D, Market Power, and the Cyclicality of Employment (2025)
Working Paper: R&D, Market Power and the Cyclicality of Employment (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:vil:papers:47

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