Managerial ability, layoffs, and unemployment

ABSTRACT

In this paper, we examine the relationship between managerial ability and corporate layoffs as well as unemployment. We find managerial ability is negatively related to layoffs. Further, we find the average managerial ability of a county is negatively related to the county’s unemployment rate. The negative relationship is strengthened in counties with low education or income levels. The above findings are consistent with the notion that high-ability managers are less likely to use layoffs to enhance firm efficiency, and managerial ability is especially important for counties with low education or income levels.

KEYWORDS:

• Managerial ability
• layoffs
• unemployment
• firm efficiency
• county-level analysis

JEL CLASSIFICATION:

• J63
• J53
• G39

Acknowledgments

Shi acknowledges funding from the Humanities and Social Sciences Foundation of the Chinese Ministry of Education (16YJA630045).

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ To preserve space, the results are not reported but are available upon request.

² We would like to thank the anonymous referee for the suggestions.

Additional information

Funding

This work was supported by the The Humanities and Social Sciences Foundation of the Chinese Ministry of Education [16YJA630045].