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Job Reallocation And The Business Cycle: New Facts An Old Debate

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  • Scott Schuh
  • Robert K Triest

Abstract

This paper provides new facts on the nature of job reallocation over the business cycle, and addresses the question of whether reallocation causes recessions or recessions cause reallocation. Although we do not resolve the question of causality, two general findings emerge that advance our understanding of job reallocation and business cycles. First, much of the cyclical fluctuation in gross job flows occurs in larger plants with relatively moderate employment growth that tends to be transitory, especially at medium-term horizons (up to five years). Unusually large employment growth rates, especially plant startups and shutdowns, are primarily small-plant phenomena and tend to be permanent, less cyclical, and occur later in recessions. Further, high job flow rates occur primarily in plants previously experiencing sharp employment contractions or expansions. Second, key variables that should determine the allocation factors of production across plants and sectors do in fact appear to be related to gross job flows, particularly job destruction. Relative prices, productivity, and investment exhibit time series correlations with job reallocation that suggest that allocative driving forces may contribute significantly to business cycle fluctuations.

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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 98-11.

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Date of creation: Sep 1998
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Handle: RePEc:cen:wpaper:98-11

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;

References

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Citations

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Cited by:
  1. Klein, Michael W. & Schuh, Scott & Triest, Robert K., 2003. "Job creation, job destruction, and the real exchange rate," Journal of International Economics, Elsevier, Elsevier, vol. 59(2), pages 239-265, March.
  2. Patrick Francois & Huw Lloyd-Ellis, 2005. "Schumpeterian Restructuring," Working Papers, Queen's University, Department of Economics 1039, Queen's University, Department of Economics.
  3. Harald Dale-Olsen & Dag Rønningen, 2000. "The Importance of Definitions of Data and Observation Frequen-cies for Job and Worker Flows - Norwegian Experiences 1996-1997," Discussion Papers, Research Department of Statistics Norway 278, Research Department of Statistics Norway.
  4. John C. Haltiwanger & Scott Schuh, 1999. "Gross job flows between plants and industries," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 41-64.
  5. Scott Schuh & Robert K. Triest, 2000. "Role of firms in job creation and destruction in U.S. manufacturing," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 29-44.
  6. Oleg Korenok & Bruce Mizrach, 2004. "The Microeconomics of Macroeconomic Asymmetries: Sectoral Driving Forces and Firm Level Characteristics," Computing in Economics and Finance 2004, Society for Computational Economics 266, Society for Computational Economics.

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