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Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains

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  • Yusuf Mercan
  • Benjamin Schoefer

Abstract

In the canonical DMP model of job openings, all job openings stem from new job creation. Jobs denote worker-firm matches, which are destroyed following worker quits. Yet, employers classify 56 percent of vacancies as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly track quits. We augment the DMP model with longer-lived jobs arising from sunk job creation costs and replacement hiring. Quits trigger vacancies, which beget vacancies through replacement hiring. This vacancy chain can raise total job openings and net employment. The procyclicality of quits can thereby amplify business cycles.

Suggested Citation

  • Yusuf Mercan & Benjamin Schoefer, 2020. "Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains," American Economic Review: Insights, American Economic Association, vol. 2(1), pages 101-124, March.
    • Handle: RePEc:aea:aerins:v:2:y:2020:i:1:p:101-24
    DOI: 10.1257/aeri.20190023
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    Cited by:

    1. Brenøe, Anne Ardila & Krenk, Ursa & Steinhauer, Andreas & Zweimüller, Josef, 2025. "How Do Firms Respond to Parental Leave Absences?," IZA Discussion Papers 17845, Institute of Labor Economics (IZA).
    2. Acharya, Sushant & Wee, Shu Lin, 2025. "On-the-job search and the productivity-wage gap," European Economic Review, Elsevier, vol. 179(C).
    3. Gálvez-Iniesta, Ismael, 2024. "The role of immigration in a deep recession," European Economic Review, Elsevier, vol. 168(C).
    4. Yusuf Mercan & Benjamin Schoefer & Petr Sedláček, 2024. "A Congestion Theory of Unemployment Fluctuations," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(1), pages 238-285, January.
    5. Benjamin Küfner & Joseph W. Sakshaug & Stefan Zins, 2022. "Analysing establishment survey non‐response using administrative data and machine learning," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 185(S2), pages 310-342, December.
    6. Snell, Andy & Stüber, Heiko & Thomas, Jonathan P., 2024. "Job security, asymmetric information, and wage rigidity," European Economic Review, Elsevier, vol. 161(C).
    7. Mario Bossler & Nicole Gürtzgen & Alexander Kubis & Benjamin Küfner & Benjamin Lochner, 2020. "The IAB Job Vacancy Survey: design and research potential," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-12, December.
    8. Lochner, Benjamin & Merkl, Christian & Stüber, Heiko & Gürtzgen, Nicole, 2021. "Recruiting intensity and hiring practices: Cross-sectional and time-series evidence," Labour Economics, Elsevier, vol. 68(C).
    9. Bagger, Jesper & Fontaine, Francois & Galenianos, Manolis & Trapeznikova, Ija, 2022. "Vacancies, employment outcomes and firm growth: Evidence from Denmark," Labour Economics, Elsevier, vol. 75(C).
    10. Anne Brenoe & Ursa Krenk & Andreas Steinhauer & Josef Zweimueller, 2025. "How Do Firms Respond to Parental Leave Absences?," RFBerlin Discussion Paper Series 2514, ROCKWOOL Foundation Berlin (RFBerlin).
    11. Guo, Junjie, 2024. "Sequential job posting and equilibrium wage dispersion with bunching," Labour Economics, Elsevier, vol. 87(C).
    12. Michael W. L. Elsby & Axel Gottfries & Ryan Michaels & David Ratner, 2025. "Vacancy Chains," Journal of Political Economy, University of Chicago Press, vol. 133(11), pages 3550-3604.
    13. Miroslav Gabrovski & Mario Rafael Silva, 2023. "Unemployment and Labor Productivity Co-movement: the Role of Firm Exit," Working Papers 202301, University of Hawaii at Manoa, Department of Economics.
    14. Wu, Jhih-Chian, 2025. "Job separation shocks, costly vacancy creation and job rationing," European Economic Review, Elsevier, vol. 177(C).

    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
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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