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Cyclical labor market sorting

Author

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  • Crane, Leland D.
  • Hyatt, Henry R.
  • Murray, Seth M.

Abstract

We consider sorting in the labor market, that is, whether high- or low-productivity workers and firms tend to match with each other, and how this varies over time using U.S. linked employer–employee data. Composition changes of workers and firms move in opposite directions over the business cycle. During and after recessions, low-rank workers are less likely to work, while the employment share of low-rank firms increases. The agreement between worker and firm ranks increases in the early stages of labor market downturns.

Suggested Citation

  • Crane, Leland D. & Hyatt, Henry R. & Murray, Seth M., 2023. "Cyclical labor market sorting," Journal of Econometrics, Elsevier, vol. 233(2), pages 524-543.
    • Handle: RePEc:eee:econom:v:233:y:2023:i:2:p:524-543
    DOI: 10.1016/j.jeconom.2021.12.015
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    Cited by:

    1. Pawe{l} Gola & Haozhou Tang, 2026. "Sorting along Business Cycles," Papers 2603.09323, arXiv.org.
    2. Cynthia Doniger, 2019. "Do Greasy Wheels Curb Inequality?," 2019 Meeting Papers 1163, Society for Economic Dynamics.
    3. Kline, Patrick, 2024. "Firm wage effects," Handbook of Labor Economics,, Elsevier.
    4. Cynthia L. Doniger, 2021. "The Ways the Cookie Crumbles: Education and the Margins of Cyclical Adjustment in the Labor Market," Finance and Economics Discussion Series 2021-019, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

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    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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