Understanding the Role of Wealth in Worker Flows

Wealth significantly influences how workers transition between jobs and employment states. When workers are unemployed, wealth may help them maintain their usual consumption levels and be more selective in their job search. Wealth may also encourage workers with a greater financial cushion to take potentially risky but high-paying jobs. However, wealth is often missing from standard labor market datasets. To fill this gap, recent work has turned to alternative data sources such the Survey of Income and Program Participation (SIPP) to document worker flows by wealth. Yusuf Mercan and Jalen Nichols use data from the SIPP to study how household wealth—both in level and composition—shapes worker flows in the United States across a broader set of worker demographics. They find that workers in wealthier households tend to have lower job separation rates, modestly higher job-finding rates, and fewer job switches than workers in lower-wealth households. Liquid wealth has a stronger effect on job search behavior than illiquid wealth. Overall, their results suggest that individuals with higher and more liquid wealth tend to hold more stable jobs, and that lower-wealth workers may engage in more frequent job searching.