Capital accumulation and labor turnover in U.S. industries: An empirical investigation of the relationship between investment in fixed assets and hirings and layoffs, 2001–2021

The capitalist mode of production is marked by a class antagonism between capital and labor, reflected in the contradictory relationship between capital accumulation and employment: while growth in fixed capital tends to expand employment, rising productivity tends to reduce it. Mechanization allows relatively fewer workers to operate additional capital, while others are discharged as outdated capital is depleted. Thus, capital accumulation affects both hirings and layoffs. This study empirically examines this relationship using labor turnover data for 14 U.S. industries over the period 2001–2021. It contributes to the literature in three main ways: first, by employing hirings and layoffs as dependent variables rather than aggregated employment levels, allowing to directly capture the simultaneous absorption and expulsion of labor; second, by applying the inverse hyperbolic sine (IHS) transformation as an alternative to the conventional natural logarithm to accommodate zero and negative values while preserving elasticity interpretation; and third, by combining these innovations with fixed effects regression analysis to provide new empirical evidence on the contradictory effects of capital accumulation on employment. Results show that investment in fixed assets is positively associated with both hirings and layoffs, consistent with the classical and Marxian political economy concept of a persistent pool of surplus labor. These contributions shed new light on the mechanisms shaping sectoral employment and, more broadly, on the structural dynamics of capitalist economies.