Abstract
This study examines what one can infer from aggregate time-series of employment under the assumption that adjustment at the micro level is discrete. Using various sets of quarterly and monthly data for the United States, I find no consistent evidence of any effect of sectoral shocks on the path of aggregate employment. Aggregate time series generated from microeconomic processes in which firms adjust employment discretely produce the same inferences as the actual data. This simulation suggests that the literature on employment dynamics based on industry or macro data cannot inform us about the size of adjustment costs and cannot yield useful information on variations in adjustment costs over time or among countries.
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