Understanding how employment responds to productivity shocks in a model with inventories
Yongsung Chang,
Andreas Hornstein and
Pierre Daniel Sarte
No 06-06, Working Paper from Federal Reserve Bank of Richmond
Abstract:
Whether technological progress raises or lowers aggregate employment in the short run has been the subject of much debate in recent years. Using a simple model of industry employment, we show that cross-industry differences of inventory holding costs, demand elasticities, and price rigidities potentially all affect employment decisions in the face of productivity shocks. In particular, the employment response to a permanent productivity shock is more likely to be positive the less costly it is to hold inventories, the more elastic industry demand is, and the more flexible prices are. Using data on 458 4-digit U.S. manufacturing industries over the period 1958-1996, we find statistically significant effects of variations in inventory holdings and demand elasticities on short-run employment responses, but find less evidence pertaining to the effects of measured price stickiness.
Keywords: Employment; Productivity (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-bec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)
Downloads: (external link)
http://www.richmondfed.org/publications/research/working_papers/2006/wp_06-6.cfm (text/html)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden
https://www.richmondfed.org/-/media/RichmondFedOrg ... /2006/pdf/wp06-6.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedrwp:06-06
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Working Paper from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().