By examining firm-level data from the U.S. manufacturing sector, we show that the short-run employment response to technology shock exhibits substantial cross-industry variation. We find that firms in industries with low inventory-sales ratios employ more workers in response to a favorable technology shock, while those with high inventory-sales ratios employ fewer workers. These results are consistent with Chang, Hornstein, and Sarte (2009) who emphasize the role of inventory-holding costs in intertemporal substitution of production. However, we could not find any systematic relationship between employment response to technology shock and the price-stickiness measure.
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