Large firms and the cyclicality of US labour productivity

We present novel stylized facts on the declining cyclicality of labour productivity for large firms. Changes in their output-labour productivity correlations mirror those in aggregate US data. Large firms account for 88% of the aggregate labour productivity-output correlation post-1985. The decline in cyclicality aligns with their increased use of extensive margin adjustments, such as hiring more workers. For a 1% output increase, large firms hire 75 additional workers pre-1985, compared to 90 post-1985. Our findings are relevant to the literature on the role of large firms in US business cycles.