Employment and Firm Heterogeneity, Capital Allocation, and Countercyclical Labor Market Policies

Abstract

Many countries have large employment shares in micro and small …rms that have limited access to formal …nancing and therefore rely on input credit. Such countries are mainly emerging and developing economies, whose business cycle dynamics are increasingly important for the global economy in light of the dramatic rise in international linkages and spillovers that have occurred over the last several decades. Emerging and developing economies implemented a host of countercyclical labor market policies amid the global …nancial crisis, but data limitations on high-frequency labor and job ‡ows prevent a detailed empirical assessment of the e¤ectiveness of these policies. To address this problem, we develop a business cycle model with frictional labor markets that is novel in light of its consistency with the employment and …rm structure of emerging and developing economies. We use the model to assess the aggregate impact of key countercyclical labor market policies. We …nd that hiring subsidies and job intermediation services for large …rms are particularly e¤ective in aiding recoveries. Policies targeting smaller …rms yield limited aggregate bene…ts and may even be detrimental to the recovery process. The labor market structure shapes sectoral allocation and explains the economy's di¤erential response to policy.

A Rapid Review of Economic Policy and Social Protection Responses to Health and Economic Crises and their Effects on Children

“…By contrast, hiring subsidies and short-time work deliver large multipliers as they stimulate job creation and employment. In Mexico, throughout various economic crises, hiring subsidies and job intermediation services for large firms have proven to be effective in aiding recovery from economic shocks while policies targeting smaller firms have had short-lived effects and may even be detrimental to aggregate economic recovery (Epstein and Shapiro, 2017). However, the study does not assess distributional consequences.…”

Review of Effects of Internal and External Factors on Selection of Financing Strategies by New Technology Ventures

“…Notably, this matter was related to the time that they made attempts to pass through stages of organizational cycles. Epstein et a (2017), in their research, took heed of the incongruity of firm and employment, allocation of capital and counter-cyclic policies of the labor market. They reached such results as the difference in the productivity of labor force and sectoral contribution to employment and products of various firms is a key factor in the explanation of feedback to policies.…”

“…Therefore, understanding the importance of new businesses and startups is more prominent than any other matter. However, according to conducted research, one of the largest challenges facing these companies is a paucity of financial resources for meeting their capital needs and operation and development of their businesses, the matter which is reiterated by Mazhar Islam et al (2017), Epstein et a (2017), Andenes and et al (2016), Organization for Economic Co-operation and Development (OCD) (2015), Krastev et al (2014), I k l , J n , M t , H n t (2014), Kl č Č l t l (2014), five years, indicating 78.1 per cent failure of such companies. According to Geordino, et.…”

Research on the Over-education of Doctoral Students in the Post-epidemic Era-An Evolutionary Perspective

“…About the meaning of over-education, relevant scholars mainly analyzed it from macro and micro aspects: from macro, over-education means that the supply of education exceeds the demand of education; microscopically, over-education means that the stock of education owned by individuals exceeds the demand of existing occupations [4]. The specific forms of over-education are different in different countries.…”