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Labor Market Flows and Vacancies in the Cross Section and Over Time

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  • R. Jason Faberman

    (Federal Reserve Bank of Philadelphia)

  • John Haltiwanger

    (University of Maryland)

  • Steven J. Davis

    (University of Chicago)

Abstract

Many theoretical models of labor market search imply a tight link between worker flows (hires and separations), vacancies, and job flows (employer-level employment growth) at the employer level. Using establishment data from multiple sources for the U.S., we show that hiring, quit, layoff, and vacancy rates exhibit strong, highly nonlinear relationships to establishment growth in the cross section. These relationships, notably for vacancy and quit rates, vary with aggregate conditions. We also develop a framework for evaluating how well the implications of various models fit the data. Aggregate variations in hires and layoffs are well captured by models with tight links between worker and job flows. Aggregate variations in quits and vacancies are not. Specifications that allow the micro-level quit relationship to vary with aggregate conditions (consistent with models of endogenous quits) perform remarkably better. Finally, our framework provides methodology for producing a backcasted series of worker flow and vacancy rates, which we estimate over the 1990-2008 period.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1045.

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Date of creation: 2010
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Handle: RePEc:red:sed010:1045

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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Web page: http://www.EconomicDynamics.org/society.htm
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References

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  1. Yashiv, Eran, 2007. "Labor search and matching in macroeconomics," European Economic Review, Elsevier, vol. 51(8), pages 1859-1895, November.
  2. Cooper, Russell & Haltiwanger, John & Willis, Jonathan L., 2007. "Search frictions: Matching aggregate and establishment observations," Journal of Monetary Economics, Elsevier, vol. 54(Supplemen), pages 56-78, September.
  3. Robert Shimer, 2007. "Reassessing the Ins and Outs of Unemployment," NBER Working Papers 13421, National Bureau of Economic Research, Inc.
  4. Steven J. Davis & R. Jason Faberman & John C. Haltiwanger & Ian Rucker, 2010. "Adjusted Estimates of Worker Flows and Job Openings in JOLTS," NBER Chapters, in: Labor in the New Economy, pages 187-216 National Bureau of Economic Research, Inc.
  5. Gadi Barlevy, 2002. "The Sullying Effect of Recessions," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 65-96.
  6. Yashiv, Eran, 2007. "Labor Search and Matching in Macroeconomics," IZA Discussion Papers 2743, Institute for the Study of Labor (IZA).
  7. Giuseppe Moscarini, 2005. "Job Matching and the Wage Distribution," Econometrica, Econometric Society, vol. 73(2), pages 481-516, 03.
  8. Michael J. Pries, 2004. "Persistence of Employment Fluctuations: A Model of Recurring Job Loss," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 193-215, 01.
  9. Russell Cooper & John Haltiwanger & Jonathan L. Willis, 2007. "Implications of Search Frictions: Matching Aggregate and Establishment-level Observations," NBER Working Papers 13115, National Bureau of Economic Research, Inc.
  10. Eran Yashiv, 2007. "Labor Search and Matching in Macroeconomics," CEP Discussion Papers dp0803, Centre for Economic Performance, LSE.
  11. Michael Pries & Richard Rogerson, 2005. "Hiring Policies, Labor Market Institutions, and Labor Market Flows," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 811-839, August.
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