Title: Essays on how employment responds to markups, investment,and trade
Abstract: Chapter 1, The Cyclicality of Firm Size
Distribution and Its Effect on
Aggregate Fluctuations. I study the
cyclicality of firm size distribution and its effect on aggregate
fluctuations
through markup variation. The evolution of firm size
distribution has consequences for
the degree of competition
between firms over the business cycle, which, in turn, offers a
basis for dynamics in aggregate markup. In this paper, I provide
empirical evidence on
the counter-cyclicality of the firm size
distribution using plant-level data. To quantify
the effect of
this evidence on aggregate fluctuations, I construct a model of
imperfect
competition in which final goods consist of a continuum
of industry goods. There are a
relatively small number of firms -
20 firms in the numerical exercise - in each industry,
so firms
take into account the effect of their own pricing on the price of
industry goods.
Aggregate markup, which equals the input-share
weighted average of firm markups, is
an increasing function of
market share inequality. Numerically, I find that the
countercyclical
firm size distribution, which is driven by
counter-cyclical relative productivity,
makes aggregate labor more
pro-cyclical compared to a constant markup economy. The
relative
volatility of labor compared to output increases by 16% in a
counter-cyclical
markup economy. Chapter 2,
The Joint Dynamics of Capital and Employment at the
Plant Level,
with William Hawkins and Ryan Michaels.
While a great deal of
research has studied the adjustment of individual factors of
production, relatively little work has investigated their joint
dynamics at the plant
level. The present paper uses plant-level
data from two countries to document the
joint adjustment of
capital and employment. The data are analyzed through the lens
of
a model of costly multi-factor adjustment that integrates features
from canonical
models of dynamic capital and labor demand. The
model places strong restrictions on
the joint dynamics, namely,
investment ought to perfectly predict employment growth.
In
contrast, 42 percent of gross capital accumulation occurs at plants
(in and years)
which record employment losses. The paper then
discusses a number of extensions to
the baseline model, including
delivery lags, alternative adjustment costs, and standard
models
of factor-biased technical change. These do not provide
satisfactory accounts
of the data. The most promising extension is
one in which the production function
is modified to enable
machinery to directly replace labor in certain tasks. The paper
concludes by illustrating the macroeconomic implications of its
findings. Chapter 3, Revisiting the Effect of
Import Penetration on the Labor
Market.
Import penetration, the
share of imports in domestic expenditure, is a common measure
of
the intensity of import competition in the literature examining the
impact of trade
on the U.S. labor market. Bernard, Jensen and
Schott (2006) partition imports into
two types, those originating
from low-wage countries and…
Publication Year: 2012
Publication Date: 2012-01-01
Language: en
Type: article
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