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The Cyclical Job Ladder


  • Giuseppe Moscarini

    () (Department of Economics, Yale University, New Haven, Connecticut 06520, USA)

  • Fabien Postel-Vinay

    () (Department of Economics, University College London, London WC1H 0AX, United Kingdom)


Many theories of labor market turnover generate a job ladder. Due to search frictions, workers earn rents from employment. All workers agree on which jobs are, in this sense, more desirable and slowly climb the job ladder through job-to-job quits. Occasionally, negative shocks throw them off the ladder and back into unemployment. We review a recent body of theory and empirical evidence on labor market turnover through the lens of the job ladder. We focus on the critical role that the job ladder plays in transmitting aggregate shocks, through the pace and direction of employment reallocation, to economic activity and wages and in shaping business cycles more generally. The main evidence concerns worker transitions, both through nonemployment and from job to job, between firms of different sizes, ages, productivity levels, and wage premiums, as well as the resulting earnings growth. Poaching by firms up the ladder is the main engine of reallocation, which shuts down in recessions.

Suggested Citation

  • Giuseppe Moscarini & Fabien Postel-Vinay, 2018. "The Cyclical Job Ladder," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 165-188, August.
  • Handle: RePEc:anr:reveco:v:10:y:2018:p:165-188

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    More about this item


    business cycles; firms; job ladder; quits; reallocation; search;

    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
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion


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