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The cyclicality of worker flows: new evidence from the SIPP

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  • Shigeru Fujita
  • Christopher J. Nekarda
  • Garey Ramey

Abstract

Drawing on CPS data, the authors show that total monthly job loss and hiring among U.S. workers, as well as job loss hazard rates, are strongly countercyclical, while job finding hazard rates are strongly procyclical. They also find that total job loss and job loss hazard rates lead the business cycle, while total hiring and job finding rates trail the cycle. In the current paper the authors use information from the Survey on Income and Program Participation (SIPP) to reevaluate these findings. SIPP data are used to construct new longitudinally consistent gross flow series for U.S. workers, covering 1983-2003. The results strongly validate the authors' findings, with two important exceptions: (1) total hiring leads the cycle in the SIPP data, and (2) the job loss rate is substantially more volatile than the job finding rate at business cycle frequencies.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 07-5.

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Date of creation: 2007
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Handle: RePEc:fip:fedpwp:07-5

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  1. Robert Shimer, 2012. "Reassessing the Ins and Outs of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 127-148, April.
  2. Gomez, Victor & Maravall, Agustin & Pena, Daniel, 1998. "Missing observations in ARIMA models: Skipping approach versus additive outlier approach," Journal of Econometrics, Elsevier, Elsevier, vol. 88(2), pages 341-363, November.
  3. Michael W. Elsby & Ryan Michaels & Gary Solon, 2007. "The Ins and Outs of Cyclical Unemployment," NBER Working Papers 12853, National Bureau of Economic Research, Inc.
  4. Robert E. Hall, 2005. "Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market," NBER Working Papers 11183, National Bureau of Economic Research, Inc.
  5. Shigeru Fujita & Garey Ramey, 2007. "Reassessing the Shimer facts," Working Papers, Federal Reserve Bank of Philadelphia 07-2, Federal Reserve Bank of Philadelphia.
  6. Ramey, Garey & Shigeru Fujita, 2006. "The Cyclicality of Job Loss and Hiring," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt4nz8p839, Department of Economics, UC San Diego.
  7. Yashiv, Eran, 2006. "U.S. Labor Market Dynamics Revisited," IZA Discussion Papers 2455, Institute for the Study of Labor (IZA).
  8. Solon, Gary, 1986. "Effects of Rotation Group Bias on Estimation of Unemployment," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 4(1), pages 105-09, January.
  9. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 25-49, March.
  10. Robert E. Hall, 2005. "Job Loss, Job Finding, and Unemployment in the U.S. Economy Over the Past Fifty Years," NBER Working Papers 11678, National Bureau of Economic Research, Inc.
  11. Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 3(3), pages 254-83, June.
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Cited by:
  1. Carlos Carrillo-Tudela (University of Essex, CESifo and IZA) and Ludo Visschers (The University of Edinburgh & Universidad Carlos III, Madrid), 2014. "Unemployment and Endogenous Reallocation over the Business Cycle," ESE Discussion Papers, Edinburgh School of Economics, University of Edinburgh 241, Edinburgh School of Economics, University of Edinburgh.
  2. Shigeru Fujita, 2011. "Dynamics of worker flows and vacancies: evidence from the sign restriction approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 26(1), pages 89-121, January/F.
  3. Matthias S. Hertweck & Oliver Sigrist, 2013. "The Aggregate Effects of the Hartz Reforms in Germany," Working papers, Faculty of Business and Economics - University of Basel 2013/01, Faculty of Business and Economics - University of Basel.
  4. Steffen Ahrens & Dennis Wesselbaum, 2009. "On the Introduction of Firing Costs," Kiel Working Papers, Kiel Institute for the World Economy 1559, Kiel Institute for the World Economy.
  5. Mark Bils & Yongsung Chang & Sun-Bin Kim, 2009. "Comparative Advantage and Unemployment," NBER Working Papers 15030, National Bureau of Economic Research, Inc.
  6. Dennis Wesselbaum, 2009. "Firing Costs in a New Keynesian Model with Endogenous Separations," Kiel Working Papers, Kiel Institute for the World Economy 1550, Kiel Institute for the World Economy.
  7. Wesselbaum, Dennis, 2009. "Firing Tax vs. Severance Payment - An Unequal Comparison," MPRA Paper 17637, University Library of Munich, Germany.
  8. Shigeru Fujita, 2011. "Declining labor turnover and turbulence," Working Papers, Federal Reserve Bank of Philadelphia 11-44, Federal Reserve Bank of Philadelphia.
  9. Ramey, Garey, 2008. "Exogenous vs. Endogenous Separation," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt0qb196qd, Department of Economics, UC San Diego.

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