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Hiring, Churn, and the Business Cycle


  • Edward P. Lazear
  • James R. Spletzer


Hires occur for two reasons - to grow a business and to replace those who have left (churn). Churn is an important part of employment dynamics, allowing workers to move to their most productive use. We present evidence on churn from the Job Openings and Labor Turnover Survey (JOLTS). Churn is procyclical. During the 2007-09 recession, four-fifths of hiring reductions are associated with reduced churn, not with reductions in job creation. We estimate that the cost of reduced churn is about two-fifths of a percentage point of GDP annually throughout the three-and-one-half year period since the beginning of the recession.

Suggested Citation

  • Edward P. Lazear & James R. Spletzer, 2012. "Hiring, Churn, and the Business Cycle," American Economic Review, American Economic Association, vol. 102(3), pages 575-579, May.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:575-79

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    References listed on IDEAS

    1. Burgess, Simon & Lane, Julia & Stevens, David, 2000. "Job Flows, Worker Flows, and Churning," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 473-502, July.
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    Cited by:

    1. Jordi Galí & Thijs van Rens, 2008. "The vanishing procyclicality of labor productivity," Economics Working Papers 1230, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2010.
    2. Chad Syverson, 2014. "The importance of measuring dispersion in firm-level outcomes," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-53, May.
    3. Hie Ahn & James Hamilton, 2016. "Heterogeneity and Unemployment Dynamics," Working Papers id:11130, eSocialSciences.
    4. Miriam Rinawi & Matthias Krapf & Uschi Backes-Gellner, 2014. "Labor market transitions after layoffs: the role of occupational skills," Economics of Education Working Paper Series 0103, University of Zurich, Department of Business Administration (IBW).
    5. Di Cintio, Marco & Grassi, Emanuele, 2015. "Labour flows and R&D: A quantile regression analysis," MPRA Paper 61714, University Library of Munich, Germany.
    6. Carrillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2016. "The extent and cyclicality of career changes: Evidence for the U.K," European Economic Review, Elsevier, vol. 84(C), pages 18-41.
    7. Piotr Cizkowicz & Andrzej Rzonca & Andrzej Toroj, 2015. "In search for appropriate lower bound.Zero lower bound vs. positive lower bound under discretion and commitment," NBP Working Papers 215, Narodowy Bank Polski, Economic Research Department.
    8. Decker, Ryan A. & Haltiwanger, John & Jarmin, Ron S. & Miranda, Javier, 2016. "Where has all the skewness gone? The decline in high-growth (young) firms in the U.S," European Economic Review, Elsevier, vol. 86(C), pages 4-23.
    9. Haddow, Abigail & Hare, Chris & Hooley, John & Shakir, Tamarah, 2013. "Macroeconomic uncertainty: what is it, how can we measure it and why does it matter?," Bank of England Quarterly Bulletin, Bank of England, vol. 53(2), pages 100-109.
    10. N. N., 2015. "WIFO-Monatsberichte, issue 11/2015," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(11), November.
    11. Martin Falk & Werner Hölzl & Harald Oberhofer, 2015. "The Importance of Firm-Level Data for Empirical Research and Economic Policy Consulting," WIFO Monatsberichte (monthly reports), WIFO, vol. 88(11), pages 845-857, November.
    12. Mukoyama, Toshihiko, 2014. "The cyclicality of job-to-job transitions and its implications for aggregate productivity," Journal of Economic Dynamics and Control, Elsevier, vol. 39(C), pages 1-17.

    More about this item

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs


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