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Vacancy Chains

Author

Listed:
  • Michael W. L. Elsby
  • Axel Gottfries
  • Ryan Michaels
  • David Ratner

Abstract

Replacement hiring plays a central role in establishment dynamics. US establishments frequently report no net change in their employment, often for years, despite facing substantial gross turnover. We devise a tractable model in which replacement hiring is driven by a novel structure of frictions, combining firm dynamics, on-the-job search, and investments into job creation that are sunk at the point of replacement. A key implication is the emergence of vacancy chains. Quantitatively, the model reconciles the incidence of replacement hiring with large cross-establishment dispersion in labor productivity and largely replicates the volatility and persistence of job creation and unemployment.

Suggested Citation

  • Michael W. L. Elsby & Axel Gottfries & Ryan Michaels & David Ratner, 2025. "Vacancy Chains," Journal of Political Economy, University of Chicago Press, vol. 133(11), pages 3550-3604.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/737234
    DOI: 10.1086/737234
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