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The Recent Decline in Employment Dynamics

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  • Hyatt, Henry R.

    ()
    (U.S. Census Bureau)

  • Spletzer, James R.

    ()
    (U.S. Census Bureau)

Abstract

In recent years, the rate at which workers and businesses exchange jobs has declined in the United States. Between 1998 and 2010, rates of job creation, job destruction, hiring, and separation declined dramatically, and the rate of job-to-job flows fell by about half. Little is known about the nature and extent of these changes, and even less about their causes and implications. In this paper, we document and attempt to explain the recent decline in employment dynamics. Our empirical work relies on the four leading datasets of quarterly employment dynamics in the United States – the Longitudinal Employer-Household Dynamics (LEHD), the Business Employment Dynamics (BED), the Job Openings and Labor Turnover Survey (JOLTS), and the Current Population Survey (CPS). We find that changes in the composition of the labor force and of employers explain relatively little of the decline. Exploiting some identities that relate the different measures to each other, we find that job creation and destruction could explain as much of a third of the decline in hires and separations, while job-to-job flows may explain more of the decline. We end our paper with a discussion of different possible explanations and their relative merits.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7231.

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Length: 57 pages
Date of creation: Feb 2013
Date of revision:
Publication status: published in: IZA Journal of Labor Economics, 2013, 2:5
Handle: RePEc:iza:izadps:dp7231

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Keywords: job destruction; job creation; separations; hires; job-to-job flows;

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References

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Citations

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Cited by:
  1. Cappellari, Lorenzo & Jenkins, Stephen P., 2013. "Earnings and Labour Market Volatility in Britain," IZA Discussion Papers 7491, Institute for the Study of Labor (IZA).
  2. Lucia Foster & Cheryl Grim & John Haltiwanger, 2014. "Reallocation in the Great Recession: Cleansing or Not?," NBER Working Papers 20427, National Bureau of Economic Research, Inc.
  3. Toshihiko Mukoyama, 2013. "The cyclicality of job-to-job transitions and its implications for aggregate productivity," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 1074, Board of Governors of the Federal Reserve System (U.S.).
  4. Molloy, Raven & Smith, Christopher L. & Wozniak, Abigail, 2014. "Declining Migration within the US: The Role of the Labor Market," IZA Discussion Papers 8149, Institute for the Study of Labor (IZA).
  5. Raven Molloy & Christopher L. Smith & Abigail K. Wozniak, 2014. "Declining Migration within the U.S.: The Role of the Labor Market," NBER Working Papers 20065, National Bureau of Economic Research, Inc.
  6. Tomaz Cajner & Isabel Cairo, 2013. "The Fading Dynamism of the US Labor Market: The Role of Demographics," 2013 Meeting Papers, Society for Economic Dynamics 1208, Society for Economic Dynamics.

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