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  3. American Economic Review
  4. December 2000
  5. Aggregate Employment Fluctuations with Microeconomic Asymmetries

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Aggregate Employment Fluctuations with Microeconomic Asymmetries

  • Jeffrey R. Campbell
  • Jonas D. M. Fisher
American Economic Review
vol. 90, no. 5, December 2000
(pp. 1323–1345)
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Abstract

We provide a simple explanation for the observation from the U.S. manufacturing sector that the job destruction rate fluctuates more than the job creation rate. In our model, proportional plant-level costs of creating and destroying jobs cause shrinking plants to be more sensitive to aggregate shocks than growing plants. We describe circumstances in which this microeconomic asymmetry is preserved in the aggregate and show that it can account for much of the observed asymmetries in gross job flows. This is so even though we abstract from job matching frictions, incomplete contracts, and aggregate congestion effects.

Citation

Campbell, Jeffrey, R., and Jonas D. M. Fisher. 2000. "Aggregate Employment Fluctuations with Microeconomic Asymmetries." American Economic Review 90 (5): 1323–1345. DOI: 10.1257/aer.90.5.1323

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
  • J23 Labor Demand
  • J68 Mobility, Unemployment, and Vacancies: Public Policy