Religion and Employment Stickiness

[Purpose] The purpose of this study is to investigate how religion affects employmentstickiness. It refers to an asymmetric employment adjustment depending on sales change. Given conflicting arguments about the role of religion, its effect on employment stickinessis an empirical question. [Methodology] We use the survey data on the number of religious adherents within eachcounty of the U.S. and measure the level of religiosity of the counties where theheadquarters of firms are located. We employ cost stickiness regression models by replacingthe dependent variable with the change in the number of employees. [Findings] Results show that the coefficient on the triple interaction term among thechanges in sales, the indicator for sales decrease, and the level of religiosity is positive andsignificant, suggesting that religion reduces the degree of employment stickiness. A numberof additional tests corroborate our baseline results. [Implications] This study adds to the literature on the relationship between religion andcorporate decisions by focusing on labor adjustment. Extending Ma et al. (2021), we findthat the role of religion in reducing cost stickiness can be applied to employment stickiness. Also, by showing that religious firms are likely to execute large－scale layoffs to recoverfrom sharp deterioration of performance, our results suggest that religion may have aconsiderable impact on local employment.