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The Importance of Two‐Sided Heterogeneity for the Cyclicality of Labour Market Dynamics

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  • Ronald Bachmann
  • Peggy Bechara

Abstract

Using administrative data on individual workers’ employment history and firms, we investigate the cyclicality of worker flows on the German labour market. Focusing on heterogeneities on both sides of the labour market, we find that small firms hire much more workers from unemployment than large firms, and that they do so at the very beginning of an economic expansion. Later on in the expansion, overall hirings more frequently result from direct job‐to‐job transitions to larger firms. Transitions from unemployment to employment at large firms are generally found to be more (pro‐)cyclical. However, this stylized fact disappears when the composition of the workforce is controlled for.

Suggested Citation

  • Ronald Bachmann & Peggy Bechara, 2019. "The Importance of Two‐Sided Heterogeneity for the Cyclicality of Labour Market Dynamics," Manchester School, University of Manchester, vol. 87(6), pages 794-820, December.
    • Handle: RePEc:bla:manchs:v:87:y:2019:i:6:p:794-820
    DOI: 10.1111/manc.12269
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    1. is not listed on IDEAS
    2. Augurzky, Boris & Reichert, Arndt & Tauchmann, Harald, 2010. "The Effect of Self-assessed Job Security on the Demand for Medical Rehab," Ruhr Economic Papers 162, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Ronald Bachmann & Mathias Sinning, 2011. "Decomposing the Ins and Outs of Cyclical Unemployment," Ruhr Economic Papers 0305, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    4. Ronald Bachmann & Peggy Bechara & Anica Kramer & Sylvi Rzepka, 2015. "Labour market dynamics and worker heterogeneity during the Great Recession – Evidence from Europe," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-29, December.
    5. Ronald Bachmann & Mathias Sinning, 2016. "Decomposing the Ins and Outs of Cyclical Unemployment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(6), pages 853-876, December.
    6. repec:spo:wpmain:info:hdl:2441/59cr4u3mmr9pobrceptvua5g8c is not listed on IDEAS
    7. Ronald Bachmann & Peggy Bechara & Anica Kramer & Sylvi Rzepka, 2014. "Labour Market Dynamics and Worker Heterogeneity During the Great Recession – Evidence from Europe," Ruhr Economic Papers 0499, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Francesco Pastore & Joanna Tyrowicz, 2013. "Polish high unemployment and spatial labor turnover. Insights from panel data analysis using unemployment registry data," Working Papers 2013-18, Faculty of Economic Sciences, University of Warsaw.
    9. Bachmann, Ronald & Baumgarten, Daniel & Stiebale, Joel, 2011. "Cross-border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany," Ruhr Economic Papers 268, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Moertel, Julia & Rebien, Martina, 2013. "Personalauswahl: Wie Langzeitarbeitslose bei den Betrieben ankommen (How long-term-unemployed are reaching firms)," IAB-Kurzbericht 201309, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Pastore, Francesco & Tyrowicz, Joanna, 2012. "Labour Turnover and the Spatial Distribution of Unemployment: A Panel Data Analysis Using Employment Registry Data," IZA Discussion Papers 7074, Institute of Labor Economics (IZA).
    12. Giuseppe Moscarini & Fabien Postel-Vinay, 2012. "The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment," American Economic Review, American Economic Association, vol. 102(6), pages 2509-2539, October.
    13. Markus Heckmann & Susanne Noll & Martina Rebien, 2013. "Stellenbesetzungen mit Hindernissen: Bestimmungsfaktoren für den Suchverlauf," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 6(3), pages 105-131, March.
    14. Ronald Bachmann & Daniel Baumgarten & Joel Stiebale, 2011. "Cross-border Investment, Heterogeneous Workers, and Employment Security – Evidence from Germany," Ruhr Economic Papers 0268, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    15. Bachmann, Ronald & Bechara, Peggy & Kramer, Anica & Rzepka, Sylvi, 2014. "A Study on Labour Market Transitions Using Micro-data from the Statistics on Income and Living Conditions (SILC). Final Report," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 111484.
    16. Boris Augurzky & Arndt Reichert & Harald Tauchmann, 2010. "The Eff ect of Self-assessed Job Security on the Demand for Medical Rehab," Ruhr Economic Papers 0162, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

    More about this item

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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