The picture of U.S. labor market dynamics is opaque. Empirical studies have yielded contradictoryfindings and debates have emerged regarding their implications. This paper aims at clarifying the picture,which is important for the understanding of the operation of the labor market, for the study of businesscycles, for the explanation of wage behavior, and for the formulation of policy. The paper determineswhat facts can be established, what are their implications, and what remains to be further investigated.The main contributions made here are: (i) Listing of data facts that can be agreed upon. These indicatethat there is considerable cyclicality and volatility of both accessions to employment and separations fromit. Hence, both are important for the understanding of the business cycle. (ii) Presenting the business cyclefacts of key series. (iii) Pointing to specific gaps in the data picture: disparities in the measurement of thesizeable flows between employment and the pool of workers out of the labor force, disagreements aboutthe relative volatility of job finding and separation rates across data sets, and the fact that the fit of thegross flows data with net employment growth data differs across studies and is not high. The definitecharacterization of labor market dynamics depends upon the closing of these data gaps.
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Lawrence J. Christiano & Terry J. Fitzgerald, 2003.
"The Band Pass Filter,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, 05.
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Other versions:
Lawrence J. Christiano & Terry J. Fitzgerald, 1999.
"The Band Pass Filter,"
NBER Working Papers
7257, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Lawrence J. Christiano & Terry J. Fitzgerald, 1999.
"The Band pass filter,"
Working Paper
9906, Federal Reserve Bank of Cleveland.
[Downloadable!]