Firm-level shocks and labor adjustments

Arbeitspapier

We analyze how firms adjust their labor in response to idiosyncratic shifts in their production function and demand curves using a unique data-set of Swedish manufacturing firms. We show that permanent shocks to firm-level demand is a main driving force behind both job and worker reallocation. In contrast, shocks to physical productivity and temporary demand shocks have a very limited impact on firm-level employment despite being important determinants of other firm-level fundamentals. We also present evidence suggesting that the adjustment to permanent demand shocks is fairly unconstrained. Most notably, firms primarily downsize through increased separations of both short- and long-tenured workers even when they could have adjusted their employment through reduced hires.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Sveriges Riksbank Working Paper Series ; No. 293

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Labor Turnover; Vacancies; Layoffs ; Technological Change: Choices and Consequences; Diffusion Processes ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
• Subject: Technology ; Demand ; Job Creation ; Rigidities ; Worker Flows

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Carlsson, Mikael ; Messina, Julián ; Nordström Skans, Oskar
• Event: Veröffentlichung
• (who): Sveriges Riksbank
• (where): Stockholm
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/129707
• Last update: 10.03.2025, 11:44 AM CET