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Labour Market Dynamics in Germany: Hirings, Separations, and Job-to-Job Transitions over the Business Cycle

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Author Info
Ronald Bachmann

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Abstract

In this paper, we provide a comprehensive overview of labour market dynamics in Western Germany by looking at gross worker flows. To do so, we use a subsample of the registry data collected by the German social security system, the IAB employment sample, for the time period 1975-2001. The latter provides daily information on 2% of the German workforce covered by social security legislation. Using these data, we are able to exactly calculate the number of transitions between the different labour market states, and between different employers over time. We first provide an overview of the cross-section and time series properties of these flows. We then study the cyclical features of gross worker flows, accessions, and separations. We find that separations are relatively flat over the cycle, while accessions are markedly procyclical, and that the increased flow into unemployment in a recession is mainly due to reduced hirings, and hence lower job-to-job transitions, rather than increased match separations. Our findings have important implications both for the way we view recessions and for the role of the labour market as a propagation mechanism for productivity shocks.

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Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2005-045.

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Length: 28 pages
Date of creation: Sep 2005
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Handle: RePEc:hum:wpaper:sfb649dp2005-045

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Related research
Keywords: worker flows; accessions; separations; business cycle; job-to-job; employer-to-employer;

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Find related papers by JEL classification:
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bernd Fitzenberger & Alfred Garloff, 2005. "Unemployment, Labor Market Transitions, and Residual Wage Dispersion," Working Papers of the Research Group Heterogenous Labor 05-02, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim. [Downloadable!]
  2. Jovanovic, Boyan, 1984. "Matching, Turnover, and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 108-22, February. [Downloadable!] (restricted)
  3. Schmidt, Christoph M., 1999. "Persistence and the German Unemployment Problem: Empirical Evidences on German Labor Market Flows," IZA Discussion Papers 31, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, vol. 38(6), pages 1287-1315, June. [Downloadable!] (restricted)
    Other versions:
  5. Machin, Stephen & Manning, Alan, 1999. "The causes and consequences of longterm unemployment in Europe," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 47, pages 3085-3139 Elsevier. [Downloadable!] (restricted)
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  6. Krause, M.U. & Lubik, T.A., 2004. "On-the-job search and the cyclical dynamics of the labor market," Discussion Paper 92, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  7. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 397-415, July. [Downloadable!] (restricted)
    Other versions:
  8. Fitzenberger, Bernd & Garloff, Alfred, 2005. "Unemployment, Labor Market Transitions, and Residual Wage Dispersion," ZEW Discussion Papers 05-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  9. Robert Shimer, 2005. "The cyclicality of hires, separations, and job-to-job transitions," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 493-508. [Downloadable!]
  10. Christoph M. Schmidt, 1999. "The Heterogeneity and Cyclical Sensitivity of Unemployment: An Exploration of German Labor Market Flows," IZA Discussion Papers 84, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Bruce Fallick & Charles A. Fleischman, 2004. "Employer-to-employer flows in the U.S. labor market: the complete picture of gross worker flows," Finance and Economics Discussion Series 2004-34, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  12. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932.
  13. Pissarides, Christopher A, 1994. "Search Unemployment with On-the-Job Search," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 457-75, July. [Downloadable!] (restricted)
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  14. Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2005. "The Flow Approach to Labor Markets: New Data Sources, Micro-Macro Links and the Recent Downturn," IZA Discussion Papers 1639, Institute for the Study of Labor (IZA). [Downloadable!]
  15. Robert Shimer, 2007. "Reassessing the Ins and Outs of Unemployment," NBER Working Papers 13421, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Barlevy, Gadi, 2002. "The Sullying Effect of Recessions," Review of Economic Studies, Blackwell Publishing, vol. 69(1), pages 65-96, January.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kai Christoffel & Keith Kuester & Tobias Linzert, 2007. "Identifying the Role of Labor Markets for Monetary Policy in an Estimated DSGE Model," CFS Working Paper Series 2007/07, Center for Financial Studies. [Downloadable!]
    Other versions:
  2. Kai Christoffel & Keith Kuester & Tobias Linzert, 2005. "The Impact of Labor Markets on the Transmission of Monetary Policy in an Estimated DSGE Model," IZA Discussion Papers 1902, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Boockmann, Bernhard & Steffes, Susanne, 2007. "Seniority and Job Stability: A Quantile Regression Approach Using Matched Employer-Employee Data," ZEW Discussion Papers 07-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. Anja Schöttner, 2005. "Relational Contracts and Job Design," SFB 649 Discussion Papers SFB649DP2005-052, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  5. Fitzenberger, Bernd & Garloff, Alfred, 2005. "Descriptive Evidence on Labor Market Transitions and the Wage Structure in Germany," ZEW Discussion Papers 05-95, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. Juan J. Dolado & Marcel Jansen & Juan F. Jimeno, 2008. "On the job search in a matching model with heterogeneous jobs and workers," Banco de España Working Papers 0813, Banco de España. [Downloadable!]
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  7. Benjamin Bental & Dominique Demougin, 2005. "Do Factor Shares Reflect Technology?," SFB 649 Discussion Papers SFB649DP2005-050, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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  8. Bachmann, Ronald & Burda, Michael C., 2008. "Sectoral Transformation, Turbulence, and Labor Market Dynamics in Germany," IZA Discussion Papers 3324, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. Yasemin Boztug & Lutz Hildebrandt, 2005. "An empirical test of theories of price valuation using a semiparametric approach, reference prices, and accounting for heterogeneity," SFB 649 Discussion Papers SFB649DP2005-057, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  10. Christian Weiner, 2005. "The Impact of Industry Classification Schemes on Financial Research," SFB 649 Discussion Papers SFB649DP2005-062, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  11. Wolfgang Härdle & Sigbert Klinke & Uwe Ziegenhagen, 2005. "Integrable e-lements for Statistics Education," SFB 649 Discussion Papers SFB649DP2005-058, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  12. Imen Bentahar & Bruno Bouchard, 2005. "Explicit characterization of the super-replication strategy in financial markets with partial transaction costs," SFB 649 Discussion Papers SFB649DP2005-053, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
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