Report

Congestion in Onboarding Workers and Sticky R&D

Abstract: Adjusting the rate of R&D spending is costly if the probability of converting new hires into productive R&D workers (“onboarding”) is decreasing in the number of hires (“congestion”). We show that such congestion induces R&D-producing firms to hire slowly in response to good shocks, and hoard workers in response to bad shocks, providing a microfoundation for the convex adjustment costs widely used to capture the delayed, hump-shaped response of R&D spending to shocks. Using novel, high-frequency productivity data on individual software developers collected from GitHub, we document quantitative evidence suggesting that congestion is an economically-significant feature of R&D investment production.

JEL Classification: E22; O36;

https://doi.org/10.59576/sr.1075

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2023-11-01

Number: 1075

Note: Revised October 2026.