Uncertainty and the employment dynamics of small and large businesses

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We examine the impact of uncertainty on employment dynamics. Alternative measures of uncertainty are constructed based on the survey of professional forecasters, and regressionbased forecasting models for GDP growth, inflation, S&P500 stock price index, and fuel prices. Our results indicate that greater uncertainty has a negative impact on growth of employment, and the effects are primarily felt by the relatively smaller businesses; the impact on large businesses are generally non-existent or weaker. Our results suggest that to truly understand the effects of uncertainty on employment dynamics, we need to focus on the relatively smaller and entrepreneurial businesses. We discuss implications for the framing of economic policy. Terms of use: Documents in EconStor mayJEL-Code: L110, D800, O300, G100, L400.

R&D Profitability: The Role of Risk and Knightian Uncertainty

“…This results somehow complement those of Ghosal and Ye (2014). Larger companies are not only better equipped to resist the negative impact of uncertainty on employment growth, but they also get higher returns in presence of risk.…”

“…the presence of both risk and ambiguity may lead to higher R&D returns than when ambiguity is not taken into account. Furthermore, similarly to Ghosal and Ye (2014), we verify whether the impact of risk varies across firm size.…”

“…Although these studies control for size, none of them explores if and how the impact of risk or uncertainty changes across firms of different size. A relevant exception is represented by Ghosal and Ye (2014), who find that the impact of uncertainty on employment growth is different for small and large businesses.…”

“…risk (Dixit and Pindyck 2012;Bloom and Reenen 2002;Doraszelski and Jaumandreu 2013). Recently, Ghosal and Ye (2014) showed that uncertainty has a different impact on employment growth for firms of different size, with negative effects mainly found for smaller businesses.…”

Firm Characteristics, Uncertainty and Research and Development (R&D) Investment: The Role of Size and Innovation Capacity

“…Thus, this study seeks to measure the uncertainty faced by a firm in the following way, based on the fact that corporate R&D investment decision is ultimately the act of maximizing profits and that it is affected by firm-specific factors. According to Ghosal and Ye [33], first, a prediction model for profit of a firm is defined, as following Equation (1).…”