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Intersectoral Mobility and Short-Run Labor Market Adjustments

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  • Chan, William

Abstract

This article presents a model of labor market adjustments as a sequential process of reallocation among various market and nonmarket sectors. Training costs introduce friction into the process, while fixed costs of working limit work sharing, resulting in unemployment. Adjustments in sectoral labor market variables to demand shocks can follow very different patterns, depending on relative demands and the expected duration of the shocks. In particular, a permanent boom in a sector may result in an initial increase in unemployment and reduction in working hours even as employment increases, reflecting contemporaneous substitution between the margins and intertemporal substitution in recruitment. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Chan, William, 1996. "Intersectoral Mobility and Short-Run Labor Market Adjustments," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 454-471, July.
    • Handle: RePEc:ucp:jlabec:v:14:y:1996:i:3:p:454-71
    DOI: 10.1086/209818
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    References listed on IDEAS

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    1. Fallick, Bruce Chelimsky, 1993. "The Industrial Mobility of Displaced Workers," Journal of Labor Economics, University of Chicago Press, vol. 11(2), pages 302-323, April.
    2. Haltiwanger, John, 1984. "The Distinguishing Characteristics of Temporary and Permanent Layoffs," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 523-538, October.
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    7. Abraham, Katharine G & Katz, Lawrence F, 1986. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 507-522, June.
    8. Topel, Robert H, 1982. "Inventories, Layoffs, and the Short-Run Demand for Labor," American Economic Review, American Economic Association, vol. 72(4), pages 769-787, September.
    9. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
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    Cited by:

    1. Kline, Patrick, 2008. "Understanding Sectoral Labor Market Dynamics: An Equilibrium Analysis of the Oil and Gas Field Services Industry," Working Papers 43, Yale University, Department of Economics.

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