American Economic Review: Vol. 90 No. 5 (December 2000)


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Aggregate Employment Fluctuations with Microeconomic Asymmetries

Article 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


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.

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Campbell, Jeffrey R. (U Chicago)
Fisher, Jonas D. M. (Federal Reserve Bank of Chicago)

JEL Classifications

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

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