Labor Market Friction and Labor Cost Stickiness: Evidence from the High-speed Railway in China
2024
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Example: if you select the 1-year option for an article published in 2019 and a metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019. If you select the 3-year option for the same article published in 2019 and the metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019, 2018 and 2017.
Citation Benchmarking is provided by Scopus and SciVal and is different from the metrics context provided by PlumX Metrics.
Paper Description
Integrating research on labor market friction and the theory of sticky costs, we argue that reduced labor market friction will increase a firm's stickiness in labor costs. This tendency is weakened by push factors increasing the potential pool of prospective employees in the labor market while it is strengthened by pull factors illustrating a firm's dependence on human capital. Leveraging the unique context of high-speed railway connection in China that decreases labor market frictions as an exogenous shock as well as the exceptional disclosure of cash compensation for employees, we find that firms tend to be stickier in labor cost when there is an introduction of high-speed railway to the firm's headquartered city. Our study contributes to strategic human capital research by relying on cost stickiness theory to capture firm labor cost investment in a novel way and by providing evidence that the bargaining power of employees shapes firms' heterogenous responses to labor market mobility.
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