NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Large Employers Are More Cyclically Sensitive

Giuseppe Moscarini, Fabien Postel-Vinay

NBER Working Paper No. 14740
Issued in February 2009
NBER Program(s):   EFG

We provide new evidence that large firms or establishments are more sensitive than small ones to business cycle conditions. Larger employers shed proportionally more jobs in recessions and create more of their new jobs late in expansions, both in gross and net terms. We employ a variety of measures of relative employment growth, employer size and classification by size, and a variety of U.S. datasets, both repeated cross-sections and job flows with employer longitudinal information, starting in the mid 1970's and now spanning four business cycles. We revisit two statistical fallacies, the Regression and Reclassification biases, and show empirically that they are quantitatively modest given our focus on relative cyclical behavior. The differential growth rate of employment between large (>1000 employees) and small (<50) firms varies by about 5% over the business cycle, and is strongly negatively correlated with the unemployment rate. This pattern occurs within, not across broad industries, regions and states, and is robust to different treatments of entry and exit. It appears to be partly driven by excess (mass) layoffs by large employers during and just after recessions, and by excess poaching by large employers late in expansions. We find the same qualitative pattern in longitudinal censuses of employers from Denmark and Brazil, and in other countries. Finally, we sketch a simple firm-ladder model of turnover that can shed light on these facts, and that we analyze in detail in companion papers.

download in pdf format
   (377 K)

email paper

This paper is available as PDF (377 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14740

Published: The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment, with Fabien Postel-Vinay. American Economic Review, October 2012, 102(6), 2509-2539. See also NBER WP 14740

Users who downloaded this paper also downloaded these:
Moscarini and Postel-Vinay The Timing of Labor Market Expansions: New Facts and a New Hypothesis
Haltiwanger, Jarmin, and Miranda w16300 Who Creates Jobs? Small vs. Large vs. Young
Haltiwanger, Scarpetta, and Schweiger w13920 Assessing Job Flows Across Countries: The Role of Industry, Firm Size and Regulations
Davis, Haltiwanger, Jarmin, and Miranda Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms
Moscarini and Vella w13819 Occupational Mobility and the Business Cycle
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us