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The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth

Author

Listed:
  • Giuseppe Moscarini
  • Fabien Postel-Vinay

Abstract

We study the cyclical comovement nominal wage growth (either monthly earnings or hourly wage rate) and labor market flows. We use microdata from the Survey of Income and Program Participation over 1996-2013 to purge composition effects in worker and job characteristics and to isolate the reallocative effect of Employer-to-Employer (EE) transitions. We find an "EE wage Phillips curve": wage inflation comoves positively with EE as strongly as with the employment rate. This correlation holds for job stayers; we interpret the EE rate as a measure of labor demand. We find no analogous evidence for the job-finding rate from unemployment.

Suggested Citation

  • Giuseppe Moscarini & Fabien Postel-Vinay, 2017. "The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth," American Economic Review, American Economic Association, vol. 107(5), pages 364-368, May.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:5:p:364-68
    Note: DOI: 10.1257/aer.p20171078
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    References listed on IDEAS

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    1. Dale T. Mortensen & Christopher A. Pissarides, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 397-415.
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    Cited by:

    1. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin & Giorgio Topa, 2022. "Job Search Behavior Among the Employed and Non‐Employed," Econometrica, Econometric Society, vol. 90(4), pages 1743-1779, July.
    2. Serdar Birinci & Fatih Karahan & Yusuf Mercan & Kurt See, 2024. "Heterogeneous Responses to Job Mobility Shocks in a HANK Model with a Frictional Labor Market," Working Papers 2024-001, Federal Reserve Bank of St. Louis.
    3. Hahn, Joyce K. & Hyatt, Henry R. & Janicki, Hubert P., 2021. "Job ladders and growth in earnings, hours, and wages," European Economic Review, Elsevier, vol. 133(C).
    4. Wenjie Zhang & Xianqiang Zou & Chuliang Luo & Lulu Yuan, 2024. "Hukou reform and labor market outcomes of urban natives in China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-41, June.
    5. Bobeica, Elena & Koester, Gerrit & Lis, Eliza & Nickel, Christiane & Porqueddu, Mario, 2019. "Understanding low wage growth in the euro area and European countries," Occasional Paper Series 232, European Central Bank.
    6. Brunow, Stephan & Lösch, Stefanie & Okhrin, Ostap, 2022. "Labor market tightness and individual wage growth: evidence from Germany," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 56, pages 1-16.
    7. João Pereira & Raul Ramos & Pedro S. Martins, 2025. "Wage Cyclicality and Labor Market Institutions," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 64(4), pages 598-615, October.
    8. Anne-Katherine Cormier & Michael Francis & Kristina Hess & Guillaume Poulin-Bellisle, 2019. "Drivers of Weak Wage Growth in Advanced Economies," Staff Analytical Notes 2019-3, Bank of Canada.
    9. Régis Barnichon & Adam Shapiro, 2024. "Phillips Meets Beveridge," NBER Chapters, in: Inflation in the COVID Era and Beyond, National Bureau of Economic Research, Inc.
    10. Andri Chassamboulli & Demetris Koursaros, 2022. "Career and Non-Career Jobs: Dangling the Carrot," University of Cyprus Working Papers in Economics 07-2022, University of Cyprus Department of Economics.
    11. Suguru Otani, 2024. "Nonparametric Estimation of Matching Efficiency and Elasticity on a Private On-the-Job Search Platform: Evidence from Japan, 2014-2024," Papers 2410.17011, arXiv.org, revised Nov 2025.
    12. Clémence Berson & Marta De Philippis & Eliana Viviano, 2020. "Job-to-job flows and wage dynamics in France and Italy," Questioni di Economia e Finanza (Occasional Papers) 563, Bank of Italy, Economic Research and International Relations Area.
    13. Cynthia L. Doniger, 2021. "What Can We Learn from Asynchronous Wage Changes?," Finance and Economics Discussion Series 2021-055r1, Board of Governors of the Federal Reserve System (U.S.), revised 31 Mar 2022.
    14. Jonathan Hambur, 2023. "Did Labour Market Concentration Lower Wages Growth Pre-COVID?," RBA Research Discussion Papers rdp2023-02, Reserve Bank of Australia.
    15. Renato Faccini & Eran Yashiv, 2022. "The importance of hiring frictions in business cycles," Quantitative Economics, Econometric Society, vol. 13(3), pages 1101-1143, July.
    16. Tanaka, Satoshi & Warren, Lawrence & Wiczer, David, 2023. "Earnings growth, job flows and churn," Journal of Monetary Economics, Elsevier, vol. 135(C), pages 86-98.
    17. Figura, Andrew & Waller, Chris, 2024. "What does the beveridge curve tell us about the likelihood of soft landings?," Journal of Economic Dynamics and Control, Elsevier, vol. 169(C).
    18. Guyonne Kalb & Jordy Meekes, 2019. "Wage Growth Distribution and Decline among Individuals: 2001-2017," RBA Annual Conference Papers acp2019-03, Reserve Bank of Australia, revised Jul 2019.
    19. Basso, Gaetano & Depalo, Domenico & Lattanzio, Salvatore, 2023. "Worker flows and reallocation during the recovery," Labour Economics, Elsevier, vol. 83(C).
    20. Andrew Figura & Christopher J. Waller, 2022. "What does the Beveridge curve tell us about the likelihood of a soft landing?," FEDS Notes 2022-07-29, Board of Governors of the Federal Reserve System (U.S.).
    21. Régis Barnichon & Adam Hale Shapiro, 2022. "What’s the Best Measure of Economic Slack?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2022(04), pages 1-05, February.
    22. Gaetano Basso & Domenico Depalo & Salvatore Lattanzio, 2022. "Job flows and reallocation during the recovery," Questioni di Economia e Finanza (Occasional Papers) 704, Bank of Italy, Economic Research and International Relations Area.
    23. Eeckhout, Jan & Weng, Xi, 2024. "The technological origins of the decline in labor market dynamism," Journal of Economic Dynamics and Control, Elsevier, vol. 169(C).

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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