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Does increased job switching signal higher wage growth?

Author

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  • Staunton, David

    (Central Bank of Ireland)

  • Lydon, Reamonn

    (Central Bank of Ireland)

Abstract

In many labour markets, job switching – when a worker leaves a job with one employer for a new job with another employer – is a strong predictor of future wage growth. If increased job switching could be used as a leading indicator of wage growth in Ireland, it could signal over-heating pressures in the economy. This Letter uses survey data to show that job switching rates tend to rise rapidly when the labour market is tight, and higher job switching tends to be followed by higher wage growth. In recent quarters, job switching rates are close to, and by some measures above, levels last seen in the early-2000s, which suggests that wage growth could strengthen in the nearterm.

Suggested Citation

  • Staunton, David & Lydon, Reamonn, 2018. "Does increased job switching signal higher wage growth?," Economic Letters 13/EL/18, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:13/el/18
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    File URL: https://www.centralbank.ie/docs/default-source/publications/economic-letters/vol.2018-no.13-does-the-increased-job-switching-signal-higher-wage-growth-(staunton-lydon).pdf?sfvrsn=6
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    Cited by:

    1. Byrne, Stephen & McIndoe-Calder, Tara, 2019. "Employment Growth: Where Do We Go From Here?," Quarterly Bulletin Articles, Central Bank of Ireland, pages 122-148, July.

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