Submit Your Manuscript Online

Inventory, Employment, and Productivity: Evidence from the U.S. Manufacturing Sector

	International Journal of Scientific Research and Engineering Development (IJSRED)	Full Text:
	Published Issue : Volume-4 Issue-1
	Year of Publication : 2021
	Unique Identification Number : IJSRED-V4I1P66
	Authors : Ernest Dorilas, Prince J. Oricha
	: Click Here | DOI : https://doi.org/10.5281/zenodo.4536676

Abstract :

Inventory investment represents one of the main determinants of employment. In the context of extensive and infrequent productivity shocks, inventory investment changes can have large effects on total employment. We investigate the relationship between inventory and employment at specific levels of total factor productivity using U.S. manufacturing sector data. We found that inventory increases total employment in the U.S. manufacturing sector significantly. The marginal effect of inventories on total employment increases at the total factor productivity level, which is explained by firms’ tendency to accumulate inventories in periods of high productivity to compensate for periods of adverse productivity shocks. But to do so, firms hire additional workers to carry out the increase in production.