Download or read book Firms' Internal Networks and Local Economic Shocks written by Xavier Giroud and published by . This book was released on 2019 with total page 87 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using confidential establishment-level data from the U.S. Census Bureau's Longitudinal Business Database, this paper documents how local shocks propagate across U.S. regions through firms' internal networks of establishments. Consistent with a model of optimal within-firm resource allocation, we find that establishment-level employment is sensitive to shocks in distant regions in which the establishment's parent firm is operating, and that the elasticity with respect to such shocks increases with the firm's financial constraint. At the aggregate regional level, we find that aggregate county-level employment is sensitive to shocks in distant counties linked through firms' internal networks.