Search frictions: Matching aggregate and establishment observations

Cooper, Russell; Haltiwanger, John; Willis, Jonathan L.

doi:10.1016/j.jmoneco.2007.06.002

Cited by 127 publications

(149 citation statements)

References 13 publications

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“…Our model is a version of the canonical Diamond-Mortensen-Pissarides random matching framework with decreasing returns in production and nonconvex hiring costs (Cooper, Haltiwanger, and Willis, 2007;Elsby and Michaels, 2013;Acemoglu and Hawkins, 2014). The model simultaneously features a realistic firm life cycle, consistent with its classic competitive setting counterparts (Jovanovic, 1982;Hopenhayn, 1992), and a frictional labor market with slack on both demand and supply sides.…”

Section: Notes: (I) Vacancies V T and Hires H T (Used To Compute Vacamentioning

confidence: 99%

Aggregate Recruiting Intensity

Gavazza

Mongey

Violante

2016

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We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economywide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable pro-cyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness.

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Section: Notes: (I) Vacancies V T and Hires H T (Used To Compute Vacamentioning

confidence: 99%

Aggregate Recruiting Intensity

Gavazza

Mongey

Violante

2016

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“…With regard to labor adjustment, he finds "high" fixed costs of labor adjustments in the U.S. (around 2.1% of a firm's annual revenue) and only "limited" per capita costs of hiring and firing. Cooper, Haltiwanger and Willis (2007), using a search model calibration, also reach a clear conclusion that the lumpy pattern of employment adjustments in the U.S. appears to be due to large fixed costs of hiring and/or firing. However, analysis in Davis, Faberman and Haltiwanger (2013) shows that hiring activities have very minimal returns to scale, which suggests that fixed costs of hiring are not the primary driver of lumpy employment patterns.…”

Section: Related Literaturementioning

confidence: 87%

Employment Dynamics in a Signaling Model with Workers' Incentives

Weingarden

2017

FEDS

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Many firms adjust employment in a "lumpy" manner -infrequently and in large bursts. This paper shows how workers' incentives can function as an endogenous cost that leads to lumpy firm-level employment adjustments such as mass layoffs.The signaling model features a firm that has private information about idiosyncratic demand shocks and relies on workers' effort for production. When workers observe the firm's employment choice but not the underlying shock, the equilibrium is characterized by partial pooling in which the firm hoards labor to maintain workers' incentives. In response to small negative shocks, the firm initially underadjusts in order to conceal information from workers; it conducts a mass layoff after business conditions deteriorate past a certain point.JEL Classification: D82, J21, J63, M51.

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“…11 Table 1 demonstrates that real GDP Granger causes markups, but markups do not Granger cause GDP. 12 That is, observations of GDP have predictive power for markups, but observations of markups 10 We show in Appendix 2 that using alternative measures of markups, e.g., the ratio of revenues to employee compensation, leads to similar results. 11 To detrend, we subtract a quadratic trend.…”

Section: Factmentioning

confidence: 89%

Asymmetric Firm Dynamics under Rational Inattention

Cheremukhin¹,

Tutino²

2014

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We study the link between business failures, markups and business cycle asymmetry in the U.S. economy with a model of optimal …rm exit under rational inattention. We show that the model's predictions of lagged, counter-cyclical and positively skewed markups together with counter-cyclical exit rates are consistent with the empirical evidence. Moreover, our model uncovers a new mechanism that links information processing with the business cycle. It predicts countercyclical attention to economic conditions consistent with survey evidence. JEL: E32, D22, D21, D80, C63.

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Search frictions: Matching aggregate and establishment observations

Cited by 127 publications

References 13 publications

Aggregate Recruiting Intensity

Aggregate Recruiting Intensity

Employment Dynamics in a Signaling Model with Workers' Incentives

Asymmetric Firm Dynamics under Rational Inattention

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