Macroeconomic effects of employment reallocation
Major shifts in employment between industries and between firms within industries usually accompany recessions. Although this observation suggests that exogenous changes in the optimal allocation of labor are an important source of aggregate employment fluctuations, the macroeconomic significance of such shocks has remained unknown. This paper empirically assesses the role of reallocation shocks for cyclical employment fluctuations, and investigates the relationship between inter- and intrasectoral employment flows. In an analysis of total employment and the share employed in manufacturing, we find that reallocation shocks account for the majority of the variance in employment shares and dispersion, while aggregate shocks' contribution is modest. The two shocks' impact on aggregate employment is sensitive to the identifying assumptions. However, under two of the three methods considered reallocation shocks account for over half of the variance in total employment. Including a measure of reallocation between firms in the manufacturing sector diminishes the effects of the intersectoral reallocation shocks on total and manufacturing employment, largely at the expense of the shocks to intrasectoral allocation. Together, the two reallocation shocks account for roughly half of the variance in total employment growth. We also find that permanent shifts in employment out of manufacturing depress job creation while increasing job destruction; by contrast, increases in employment reallocation between manufacturing establishments are associated with increases in both creation and destruction.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 44 (1996)
Issue (Month): 1 (June)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/jme|
When requesting a correction, please mention this item's handle: RePEc:eee:crcspp:v:44:y:1996:i::p:87-116. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.