Working Paper: NBER ID: w5767
Authors: Jeffrey R. Campbell; Jonas D. M. Fisher
Abstract: We provide a simple explanation for the observation that the variance of job destruction is greater than the variance of job creation: job creation is costlier at the margin than job destruction. As Caballero [2] has argued, asymmetric employment adjustment costs at the establishment level need not imply asymmetric volatility of aggregate job flows. We construct an equilibrium model in which (S,s)-type employment policies respond endogenously to aggregate shocks. The microeconomic asymmetries in the model can dampen the response of total job creation to an aggregate shock and cause it to be less volatile than total job destruction. This is so even though aggregate shocks are symmetrically distributed.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| asymmetric employment adjustment costs (J65) | volatility of job creation (J63) |
| asymmetric employment adjustment costs (J65) | volatility of job destruction (J63) |
| job destruction (J63) | job creation (J68) |
| cost structure associated with job creation (J39) | variance of job creation (J23) |
| cost structure associated with job destruction (J63) | variance of job destruction (J63) |
| volatility of job destruction (J63) | volatility of job creation (J63) |
| employment policies (J68) | job destruction (J63) |
| employment policies (J68) | job creation (J68) |
| aggregate disturbances (E10) | job destruction (J63) |
| aggregate disturbances (E10) | job creation (J68) |
| job reallocation (J62) | job growth (O49) |