Aggregate employment dynamics: building from microeconomic evidence

Article Abstract:

Quarterly employment data from US manufacturing corporations was applied to study microeconomic employment adjustment and its aggregate implications. The data was used to retrace the path of cross-sectional distribution of deviations between actual and desired employment. Results show that only a limited number of fluctuations in cross-sectional distributions presented in average employment growth fluctuations can be related to reallocation shocks. Moreover, the findings support the premise that microeconomic heterogeneity is relevant for microeconomic as well as macroeconomic issues.

Economics, Research and Development in the Social Sciences and Humanities, Manufacturing industry, Manufacturing industries, Employment

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Beyond the partial-adjustment model

Article Abstract:

Adjustments tend to be large when consumers and firms respond to changes in the market. There is empirical relevance in replacing the partial-adjustment model with the increasing-hazard model, which provides richer aggregate dynamics. The increasing-hazard model performs better than the constant-hazard model by providing better analyses when large shocks occur. The model is more effective than the partial-adjustment model when applied to the manufacturing industry during recessions and expansions.

Economic stabilization

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Plant-level adjustment and aggregate investment dynamics

Article Abstract:

Plant data was used to explain investment behavior at the microeconomic level and develop an aggregate investment equation that explicitly uses the distribution of firms with respect to investment determinants. Data was taken from a sample of seven thousand continuously operating US manufacturing plants for the 1972-1988 period. The view of investment behavior resulting from microeconomic data analysis is found to be sensible and different from expected results.

Analysis, Investments

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