Uncertainty and Firms' Labour Decisions. Evidence from European Countries

Arbeitspapier

Uncertainty affects employers' decisions on labour workforce, as it does on capital. We exploit differences on how firms adjust their labour work-force when uncertainty increases. Using data from the Wage Dynamic Network Survey for 25 European countries, we first construct, opposite to usual aggregate indicators, a set of uncertainty indicators exploiting firms' microeconomic environment. We combine variability from the country, sector and size of the firm. Secondly, we investigate the effect of uncertainty on firms' strategies to adjust labour through hirings and rings. Results reveal that firms reduce hiring decisions and recur to individual layos more frequently when uncertainty increases. An increase of one point in the uncertainty indicator increases the probability of having frozen hiring in between 21% to 39%. We also find more significant effects when firms are facing credit constraints and labour adjustment costs are higher.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 13645

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Firm Behavior: Empirical Analysis ; Criteria for Decision-Making under Risk and Uncertainty ; Labor Force and Employment, Size, and Structure ; Labor Demand
• Thema: uncertainty ; labour adjustment ; firms' labour decisions ; freeze hirings ; layoffs

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Martinez-Matute, Marta ; Urtasun, Alberto
• Ereignis: Veröffentlichung
• (wer): Institute of Labor Economics (IZA)
• (wo): Bonn
• (wann): 2020

Weitere Informationen

• Handle: http://hdl.handle.net/10419/227172
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ