Sustained High Rates Of Job Creation And Destruction In Substate Economies

Hires occur for two reasons - to grow a business and to replace those who have left (churn). Churn is an important part of employment dynamics, allowing workers to move to their most productive use. We present evidence on churn from the Job Openings and Labor Turnover Survey (JOLTS). Churn is procyclical. During the 2007-09 recession, four-fifths of hiring reductions are associated with reduced churn, not with reductions in job creation. We estimate that the cost of reduced churn is about two-fifths of a percentage point of GDP annually throughout the three-and-one-half year period since the beginning of the recession.

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The Business Cycle And Competition In The U.S. Brewing Industry

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v18i2.2119 ◽

2011 ◽

Vol 18 (2) ◽

Cited By ~ 2

Author(s):

Craig A. Gallet ◽

Patricia J. Euzent

Keyword(s):

Business Cycle ◽

Font Size ◽

Brewing Industry ◽

Game Theoretic ◽

Demand Fluctuations ◽

The Business Cycle ◽

The U.S

Recent game-theoretic models of cartel behavior assess the sustainability of cooperation in the presence of demand fluctuations.  Depending on the stochastic assumptions of demand, different outcomes are predicted.  Accordingly, this paper investigates the effects of demand fluctuations on competition in the U.S. brewing industry.  The results show that competition among brewers is greater during periods associated with significant negative shocks to demand, lower observed demand, lower expected future industry profit, and lower advertising.

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Model identification, migration, and investment-specific shocks: Three essays

10.26686/wgtn.17134700 ◽

2021 ◽

Author(s):

◽

Christopher Smith

Keyword(s):

Human Capital ◽

Business Cycle ◽

Open Economy ◽

Structural Parameters ◽

Small Open Economy ◽

Data Series ◽

Prior Beliefs ◽

Cyclical Fluctuations ◽

Per Capita ◽

The Business Cycle

This thesis consists of an introduction and three substantive chapters. Chapter 2 explores the identification of a small open economy model. Chapter 3 focuses on the business cycle consequences of migration. And chapter 4 investigates the contribution of investment-specific technology shocks to business cycle fluctuations in the presence of financial frictions. Chapter 2 takes a conventional new open economy macro model for a small open economy and addresses three questions: what data series should be used to identify the parameters of such a model? Are foreign data important for the identification of domestic parameters? And lastly, which structural parameters are interdependent? The chapter illustrates an applied methodology that enables an investigator to understand which data series are informative about parameters. The methodology can also be used to learn about the properties of the model. In particular, the methodology highlights which parameters are connected to which data series. Identification of business cycle models matters because our ability to recover structural parameters is influenced by the data series that are used to inform the estimation. Structural parameters determine both the specification of household preferences and the constraints that affect business cycle volatility, which together determine welfare. Consequently, identification analysis can provide insights into household welfare, which in turn has ramifications for the specification of monetary policy rules. If parameters are identified then the likelihood will eventually outweigh any prior beliefs as the sample size becomes large (Gelman et al., 2004, p. 107). The approach discussed here thus shows whether data will eventually dominate prior beliefs about parameters, determining whether analysis can – in the limit – resolve conflicting prior beliefs, and therefore usefully inform the design of policy rules. Chapter 3 of this thesis examines the business cycle effects that arise from an expansion of the population due to migration. In recent years, migration flows have become a highly politicised topic, both in New Zealand and abroad. While the debate on migration has become heated, comparatively little is known about the business cycle consequences of migration flows. This chapter contributes to the macroeconomic literature by illustrating the contribution that migration shocks make to cyclical fluctuations in New Zealand, and illustrates their dynamic impact. Using an estimated dynamic stochastic general equilibrium (DSGE) model of a small open economy and a structural vector autoregression, the chapter shows that migration shocks account for a considerable portion of the variability of per capita gross domestic product (GDP). While migration shocks matter for the capital investment and consumption components of per capita GDP, other shocks are more important drivers of cyclical fluctuations in these aggregates. Migration shocks also make some contribution to residential investment and real house prices, but other shocks play a more substantial role in driving housing market volatility. In the DSGE model, the level of human capital possessed by migrants relative to that of locals materially affects the business cycle impact of migration. The impact of migration shocks is larger when migrants have substantially different – larger or smaller – levels of human capital relative to locals. When the average migrant has higher levels of human capital than locals, as seems to be common for migrants into most OECD¹ economies, a migration shock has an expansionary effect on per capita GDP and its components, which also accords with the evidence from a structural vector autoregression. Chapter 4 of this thesis investigates the contribution of investment-specific technology (IST) shocks in driving cyclical fluctuations in a closed economy model when a borrowing constraint is introduced à la Kiyotaki and Moore (1997). IST shocks have been identified as a major driver of the business cycle, eg see Greenwood et al. (2000), and Justiniano et al. (2010, 2011). These shocks affect the rate at which investment goods are transformed into capital stock, and have been linked to frictions in financial markets, because financial intermediation is instrumental in facilitating investment. The third chapter shows that the importance of these investment shocks is in fact substantially diminished when collateral constraints on firms are introduced into an estimated dynamic stochastic general equilibrium model. In the presence of binding collateral constraints, risk premium shocks, which perturb interest rates and affect intertemporal substitution, supplant IST shocks as important drivers of the business cycle. ¹ Organisation for Economic Cooperation and Development.

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The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment

The American Economic Review ◽

10.1257/aer.102.6.2509 ◽

2012 ◽

Vol 102 (6) ◽

pp. 2509-2539 ◽

Cited By ~ 108

Author(s):

Giuseppe Moscarini ◽

Fabien Postel-Vinay

Keyword(s):

Business Cycle ◽

Cross Sections ◽

Job Creation ◽

The United States ◽

Differential Growth ◽

Factor Demand ◽

The Business Cycle ◽

Small Employers ◽

Creation Rate ◽

Differential Growth Rate

We document a negative correlation, at business cycle frequencies, between the net job creation rate of large employers and the level of aggregate unemployment that is much stronger than for small employers. The differential growth rate of employment between initially large and small employers has an unconditional correlation of —0.5 with the unemployment rate, and varies by about 5 percent over the business cycle. We exploit several datasets from the United States, Denmark, and France, both repeated cross sections and job flows with employer longitudinal information, spanning the last four decades and several business cycles. We discuss implications for theories of factor demand. (JEL D22, E23, E32, J23, L25)

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Job Creation and Destruction over the Business Cycles and the Impact on Individual Job Flows in Denmark 1980-2001*

Allgemeines Statistisches Archiv ◽

10.1007/s10182-005-0200-2 ◽

2005 ◽

Vol 89 (2) ◽

pp. 183-207 ◽

Cited By ~ 8

Author(s):

Rikke Ibsen ◽

Niels Westergaard-Nielsen

Keyword(s):

Business Cycles ◽

Job Creation ◽

Job Flows ◽

The Impact ◽

Job Creation And Destruction

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JOB FLOWS AND PRODUCTIVITY DYNAMICS: EVIDENCE FROM U.S. MANUFACTURING

Macroeconomic Dynamics ◽

10.1017/s1365100507060026 ◽

2007 ◽

Vol 11 (2) ◽

pp. 175-201 ◽

Cited By ~ 2

Author(s):

CHRISTOPHER H. WHEELER

Keyword(s):

Productivity Growth ◽

A Priori ◽

Job Creation ◽

Positive Association ◽

Annual Data ◽

Job Flows ◽

Job Destruction ◽

Cross Sectional ◽

High Productivity ◽

Job Creation And Destruction

Through their influence on the cross-sectional distribution of productivity across firms and workers, job creation and destruction likely have an impact on the rate at which aggregate productivity changes over time. However, the nature of this effect is not, a priori, clear. Although a broad consensus has emerged suggesting that job destruction enhances productivity by eliminating inefficient production units, theories disagree with regard to the effect of job creation. If job flows represent the reallocation of labor from low- to high-productivity positions, job creation would boost productivity growth. If, instead, they represent changes in employment along a primarily low-skill dimension, the effect would be negative. This paper estimates the influence of job creation and destruction on total factor productivity (TFP) growth using annual data on four-digit U.S. manufacturing. As expected, the results reveal a positive association between job destruction and changes in TFP. Yet, they also indicate that job creation tends to have a negative effect on productivity growth.

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Model identification, migration, and investment-specific shocks: Three essays

10.26686/wgtn.17134700.v1 ◽

2021 ◽

Author(s):

◽

Christopher Smith

Keyword(s):

Human Capital ◽

Business Cycle ◽

Open Economy ◽

Structural Parameters ◽

Small Open Economy ◽

Data Series ◽

Prior Beliefs ◽

Cyclical Fluctuations ◽

Per Capita ◽

The Business Cycle

This thesis consists of an introduction and three substantive chapters. Chapter 2 explores the identification of a small open economy model. Chapter 3 focuses on the business cycle consequences of migration. And chapter 4 investigates the contribution of investment-specific technology shocks to business cycle fluctuations in the presence of financial frictions. Chapter 2 takes a conventional new open economy macro model for a small open economy and addresses three questions: what data series should be used to identify the parameters of such a model? Are foreign data important for the identification of domestic parameters? And lastly, which structural parameters are interdependent? The chapter illustrates an applied methodology that enables an investigator to understand which data series are informative about parameters. The methodology can also be used to learn about the properties of the model. In particular, the methodology highlights which parameters are connected to which data series. Identification of business cycle models matters because our ability to recover structural parameters is influenced by the data series that are used to inform the estimation. Structural parameters determine both the specification of household preferences and the constraints that affect business cycle volatility, which together determine welfare. Consequently, identification analysis can provide insights into household welfare, which in turn has ramifications for the specification of monetary policy rules. If parameters are identified then the likelihood will eventually outweigh any prior beliefs as the sample size becomes large (Gelman et al., 2004, p. 107). The approach discussed here thus shows whether data will eventually dominate prior beliefs about parameters, determining whether analysis can – in the limit – resolve conflicting prior beliefs, and therefore usefully inform the design of policy rules. Chapter 3 of this thesis examines the business cycle effects that arise from an expansion of the population due to migration. In recent years, migration flows have become a highly politicised topic, both in New Zealand and abroad. While the debate on migration has become heated, comparatively little is known about the business cycle consequences of migration flows. This chapter contributes to the macroeconomic literature by illustrating the contribution that migration shocks make to cyclical fluctuations in New Zealand, and illustrates their dynamic impact. Using an estimated dynamic stochastic general equilibrium (DSGE) model of a small open economy and a structural vector autoregression, the chapter shows that migration shocks account for a considerable portion of the variability of per capita gross domestic product (GDP). While migration shocks matter for the capital investment and consumption components of per capita GDP, other shocks are more important drivers of cyclical fluctuations in these aggregates. Migration shocks also make some contribution to residential investment and real house prices, but other shocks play a more substantial role in driving housing market volatility. In the DSGE model, the level of human capital possessed by migrants relative to that of locals materially affects the business cycle impact of migration. The impact of migration shocks is larger when migrants have substantially different – larger or smaller – levels of human capital relative to locals. When the average migrant has higher levels of human capital than locals, as seems to be common for migrants into most OECD¹ economies, a migration shock has an expansionary effect on per capita GDP and its components, which also accords with the evidence from a structural vector autoregression. Chapter 4 of this thesis investigates the contribution of investment-specific technology (IST) shocks in driving cyclical fluctuations in a closed economy model when a borrowing constraint is introduced à la Kiyotaki and Moore (1997). IST shocks have been identified as a major driver of the business cycle, eg see Greenwood et al. (2000), and Justiniano et al. (2010, 2011). These shocks affect the rate at which investment goods are transformed into capital stock, and have been linked to frictions in financial markets, because financial intermediation is instrumental in facilitating investment. The third chapter shows that the importance of these investment shocks is in fact substantially diminished when collateral constraints on firms are introduced into an estimated dynamic stochastic general equilibrium model. In the presence of binding collateral constraints, risk premium shocks, which perturb interest rates and affect intertemporal substitution, supplant IST shocks as important drivers of the business cycle. ¹ Organisation for Economic Cooperation and Development.

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Job-to-Job Flows and the Business Cycle

SSRN Electronic Journal ◽

10.2139/ssrn.2017672 ◽

2012 ◽

Cited By ~ 8

Author(s):

Henry R. Hyatt ◽

Erika McEntarfer

Keyword(s):

Business Cycle ◽

Job Flows ◽

The Business Cycle

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