Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129707
Authors: 
Carlsson, Mikael
Messina, Julián
Nordström Skans, Oskar
Year of Publication: 
2014
Series/Report no.: 
Sveriges Riksbank Working Paper Series 293
Abstract: 
We analyze how firms adjust their labor in response to idiosyncratic shifts in their production function and demand curves using a unique data-set of Swedish manufacturing firms. We show that permanent shocks to firm-level demand is a main driving force behind both job and worker reallocation. In contrast, shocks to physical productivity and temporary demand shocks have a very limited impact on firm-level employment despite being important determinants of other firm-level fundamentals. We also present evidence suggesting that the adjustment to permanent demand shocks is fairly unconstrained. Most notably, firms primarily downsize through increased separations of both short- and long-tenured workers even when they could have adjusted their employment through reduced hires.
Subjects: 
Technology
Demand
Job Creation
Rigidities
Worker Flows
JEL: 
J23
J63
O33
C33
Document Type: 
Working Paper

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