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Congestion in Onboarding Workers and Sticky R&D

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Abstract

R&D investment spending exhibits a delayed and hump-shaped response to shocks. We show in a simple partial equilibrium model that rapidly adjusting R&D investment is costly if the probability of converting new hires into productive R&D workers (“onboarding”) is decreasing in the number of new hires (“congestion”). Congestion thus causes R&D-producing firms to slowly hire new workers in response to good shocks and hoard workers in response to bad shocks, providing a microfoundation for convex adjustment costs in R&D investment. Using novel, high-frequency productivity data on individual software developers collected from GitHub, a popular online collaboration platform, we provide quantitative evidence for such congestion. Calibrated to this evidence, a sticky-wage new Keynesian model with heterogeneous investment-producing firms subject to congestion in onboarding and no other frictions yields hump-shaped responses of R&D investment to shocks.

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  • Justin Bloesch & Jacob P. Weber, 2023. "Congestion in Onboarding Workers and Sticky R&D," Staff Reports 1075, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:97288
    DOI: 10.59576/sr.1075
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    References listed on IDEAS

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    1. Moritz Goldbeck, 2022. "Bit by Bit - Colocation and the Death of Distance in Software Developer Networks," ifo Working Paper Series 386, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Frank Smets & Rafael Wouters, 2007. "Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach," American Economic Review, American Economic Association, vol. 97(3), pages 586-606, June.
    3. Felix Holub & Beate Thies, 2023. "Air Quality, High-Skilled Worker Productivity And Adaptation: Evidence From Github," CRC TR 224 Discussion Paper Series crctr224_2023_402, University of Bonn and University of Mannheim, Germany.
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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O36 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Open Innovation

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