R&D, Market Power and the Cyclicality of Employment

Uluc Aysun, Melanie Guldi, Adam Honig and Zeynep Yom

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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