Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243270 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
BGPE Discussion Paper No. 212
Publisher: 
Friedrich-Alexander-Universität Erlangen-Nürnberg, Erlangen und Nürnberg
Abstract: 
Uncertainty shocks are found to adversely affect labor market outcomes. Most studies attribute labor adjustments costs for the propagation of macroeconomic uncertainty to the labor market. Given that large establishments in Germany face higher labor adjustments cost, they should be affected more strongly by these shocks. Therefore, this paper studies the effects of uncertainty shocks on employment adjustments in large and small establishments employing four structural vector auto-regressive models with quarterly data for Germany in the period 1991-2014. These four models estimate effects of uncertainty shocks on employment, worker flows, job flows as well as worker churn, both for establishments with less than 100 and with at least 100 employees. The results suggest that uncertainty shocks induce considerable employment fluctuations in large establishments, while they have barely an effect on small establishments. Furthermore, large establishments adjust their labor input in response to an uncertainty shock by delaying the replacement of workers who leave these establishments.
Subjects: 
Uncertainty Shocks
Employment
Worker Flows
Job Flows
Worker Churn
Establishment Size
Structural Vector Auto-Regression
Germany
JEL: 
E24
E32
J63
Document Type: 
Working Paper

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