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Worker flows and job flows: a quantitative investigation

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  • Shigeru Fujita
  • Makoto Nakajima

Abstract

This paper studies the quantitative properties of a multiple-worker firm matching model with on-the-job search where heterogeneous firms operate decreasing-returns-to-scale production technology. We focus on the model's ability to replicate the business cycle features of job flows, worker flows between employment and unemployment, and job-to-job transitions. The calibrated model successfully replicates (i) countercyclical worker flows between employment and unemployment, (ii) procyclical job-to-job transitions, and (iii) opposite movements of job creation and destruction rates over the business cycle. The cyclical properties of worker flows between employment and unemployment differ from those of job flows, partly because of the presence of job-to-job transitions. We also show, however, that job flows measured by net employment changes differ significantly from total worker separation and accession rates, because separations also occur at firms with positive net employment changes, and similarly firms that are shrinking on net may hire workers to partially offset attritions. The presence of job-to-job transitions is the key to producing these differences.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 13-09.

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Date of creation: 2013
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Handle: RePEc:fip:fedpwp:13-09

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Keywords: Employment ; Unemployment;

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Cited by:
  1. Davis, Steven J. & Faberman, R. Jason & Haltiwanger, John, 2012. "Labor market flows in the cross section and over time," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 1-18.
  2. Leo Kaas & Philipp Kircher, 2011. "Efficient Firm Dynamics in a Frictional Labor Market," CESifo Working Paper Series 3336, CESifo Group Munich.
  3. Andrea Pescatori & Murat Tasci, 2011. "Search Frictions and the Labor Wedge," Koç University-TUSIAD Economic Research Forum Working Papers 1113, Koc University-TUSIAD Economic Research Forum.
  4. Ratner, David, 2013. "Unemployment Insurance Experience Rating and Labor Market Dynamics," Finance and Economics Discussion Series 2013-86, Board of Governors of the Federal Reserve System (U.S.).
  5. Christopher Reicher, 2011. "Hiring chains and the dynamic behavior of job and worker flows," Kiel Working Papers 1709, Kiel Institute for the World Economy.
  6. Hawkins, William B. & Acemoglu, Daron, 0. "Search with multi-worker firms," Theoretical Economics, Econometric Society.
  7. Nicolas Roys, 2010. "Estimating Labor Market Rigidities with Heterogeneous Firms," 2010 Meeting Papers 127, Society for Economic Dynamics.
  8. Edouard Schaal, 2011. "Uncertainty, Productivity and Unemployment in the Great Depression," 2011 Meeting Papers 1450, Society for Economic Dynamics.
  9. Bachmann, Rüdiger & Bayer, Christian & Seth, Stefan & Wellschmied, Felix, 2013. "Cyclicality of Job and Worker Flows: New Data and a New Set of Stylized Facts," IZA Discussion Papers 7192, Institute for the Study of Labor (IZA).

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