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The cyclicality of hires, separations, and job-to-job transitions

  • Robert Shimer

This paper measures the job-finding, separation, and job-to-job transition rates in the United States from 1948 to 2004. The job-finding and job-to-job transition rates are strongly procyclical and the separation rate is nearly acyclical, especially since 1985. The author develops a simple model in which unemployed workers search for jobs and employed workers search for better jobs. The model predicts that an increase in either the job-finding rate or the separation rate raises the job-to-job transition rate, which is qualitatively and quantitatively consistent with the available evidence. In contrast, if the job-finding rate were acyclical and the separation rate countercyclical, as is the conventional wisdom, the model predicts that the job-to-job transition rate would be counterfactually countercyclical.

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Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2005)
Issue (Month): Jul ()
Pages: 493-508

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Handle: RePEc:fip:fedlrv:y:2005:i:jul:p:493-508:n:v.87no.4
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