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Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage

Listed author(s):
  • John Haltiwanger
  • Henry Hyatt
  • Erika McEntarfer

Do the job-to-job moves of workers contribute to the cyclicality of employment growth at different types of firms? In this paper, we use linked employer-employee data to provide direct evidence on the role of job-to-job flows in job reallocation in the U.S. economy. To guide our analysis, we look to the theoretical literature on on-the-job search, which predicts that job-to-job flows should reallocate workers from small to large firms. While this prediction is not supported by the data, we do find that job-to-job moves generally reallocate workers from lower paying to higher paying firms, and this reallocation of workers is highly procyclical. During the Great Recession, this firm wage job ladder collapsed, with net worker reallocation to higher wage firms falling to zero. We also find that differential responses of net hires from non-employment play an important role in the patterns of the cyclicality of employment dynamics across firms classified by size and wage. For example, we find that small and low wage firms experience greater reductions in net hires from non-employment during periods of economic contractions.

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File URL: https://www2.census.gov/ces/wp/2015/CES-WP-15-13.pdf
File Function: First version, 2015
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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 15-13.

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Length: 90 pages
Date of creation: Jun 2015
Handle: RePEc:cen:wpaper:15-13
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  1. Melissa Bjelland & Bruce Fallick & John Haltiwanger & Erika McEntarfer, 2011. "Employer-to-Employer Flows in the United States: Estimates Using Linked Employer-Employee Data," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(4), pages 493-505, October.
  2. Giuseppe Moscarini & Fabien Postel-Vinay, 2013. "Stochastic Search Equilibrium," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1545-1581.
  3. Lisa B. Kahn & Erika McEntarfer, 2014. "Employment Cyclicality and Firm Quality," NBER Working Papers 20698, National Bureau of Economic Research, Inc.
  4. Bruce C. Fallick & John Haltiwanger & Erika McEntarfer, 2012. "Job-to-job flows and the consequences of job separations," Finance and Economics Discussion Series 2012-73, Board of Governors of the Federal Reserve System (U.S.).
  5. Henry Hyatt & James Spletzer, 2013. "The recent decline in employment dynamics," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-21, December.
  6. Teresa C Fort & John Haltiwanger & Ron S Jarmin & Javier Miranda, 2013. "How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 520-559, August.
  7. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
  8. Giuseppe Moscarini & Fabien Postel-Vinay, 2016. "Did the Job Ladder Fail after the Great Recession?," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 55-93.
  9. Henry Hyatt & Erika McEntarfer & Kevin McKinney & Stephen Tibbets & Doug Walton, 2014. "JOB-TO-JOB (J2J) Flows: New Labor Market Statistics From Linked Employer-Employee Data," Working Papers 14-34, Center for Economic Studies, U.S. Census Bureau.
  10. Gerard J. van den Berg, 2003. "Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1337-1357, November.
  11. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, 03.
  12. John M. Abowd & Bryce E. Stephens & Lars Vilhuber & Fredrik Andersson & Kevin L. McKinney & Marc Roemer & Simon Woodcock, 2009. "The LEHD Infrastructure Files and the Creation of the Quarterly Workforce Indicators," NBER Chapters,in: Producer Dynamics: New Evidence from Micro Data, pages 149-230 National Bureau of Economic Research, Inc.
  13. Kory Kroft & Fabian Lange & Matthew J. Notowidigdo, 2013. "Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1123-1167.
  14. Cody Henderson & Henry Hyatt, 2012. "Estimation of Job-to-Job Flow Rates under Partially Missing Geography," Working Papers 12-29, Center for Economic Studies, U.S. Census Bureau.
  15. Henry Hyatt & Erika McEntarfer, 2012. "Job-to-Job Flows in the Great Recession," American Economic Review, American Economic Association, vol. 102(3), pages 580-583, May.
  16. John Haltiwanger & Henry Hyatt & Erika McEntarfer & Liliana Sousa & Stephen Tibbets, 2014. "Firm Age And Size In The Longitudinal Employer-Household Dynamics Data," Working Papers 14-16, Center for Economic Studies, U.S. Census Bureau.
  17. Alan B. Krueger & Judd Cramer & David Cho, 2014. "Are the Long-Term Unemployed on the Margins of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 229-299.
  18. Henry Hyatt & Erika McEntarfer, 2012. "Job-to-Job Flows and the Business Cycle," Working Papers 12-04, Center for Economic Studies, U.S. Census Bureau.
  19. Davis, Steven J. & Faberman, R. Jason & Haltiwanger, John, 2012. "Labor market flows in the cross section and over time," Journal of Monetary Economics, Elsevier, vol. 59(1), pages 1-18.
  20. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
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