Corporate hiring under uncertainty

Using granular data on job postings and employee flows, we examine how firms adjust human capital investments during periods of uncertainty brought on by gubernatorial elections. We find that firms reduce job postings in the six months leading up to an election, particularly for roles more costly to reverse, such as high-skilled, less flexible, and unionized positions. We also explore the sources of election uncertainty, finding stronger effects in elections where public interests focus more heavily on labor issues. Our results are consistent with the real options framework, where firms adopt a “wait and see” approach in response to uncertainty.