Changing business dynamism and productivity: Shocks versus responsiveness
By: Decker, Ryan A
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Material type: 
BookPublisher: The American Economic Review Description: 110(12), Dec, 2020: p.3952-3990.Subject(s): Job reallocation
In:
The American Economic ReviewSummary: The pace of job reallocation has declined in the United States in recent decades. We draw insight from canonical models of business dynamics in which reallocation can decline due to (i) lower dispersion of idiosyncratic shocks faced by businesses, or (ii) weaker marginal responsiveness of businesses to shocks. We show that shock dispersion has actually risen, while the responsiveness of business-level employment to productivity has weakened. Moreover, declining responsiveness can account for a significant fraction of the decline in the pace of job reallocation, and we find suggestive evidence this has been a drag on aggregate productivity. – Reproduced
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Articles
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Indian Institute of Public Administration | 110(12), Dec, 2020: p.3952-3990 | Available | AR124908 |
The pace of job reallocation has declined in the United States in recent decades. We draw insight from canonical models of business dynamics in which reallocation can decline due to (i) lower dispersion of idiosyncratic shocks faced by businesses, or (ii) weaker marginal responsiveness of businesses to shocks. We show that shock dispersion has actually risen, while the responsiveness of business-level employment to productivity has weakened. Moreover, declining responsiveness can account for a significant fraction of the decline in the pace of job reallocation, and we find suggestive evidence this has been a drag on aggregate productivity. – Reproduced
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