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Recall and Unemployment

Author

Listed:
  • Shigeru Fujita
  • Giuseppe Moscarini

Abstract

We document in the Survey of Income and Program Participation covering 1990- 2013 that a surprisingly large share of workers return to their previous employer after a jobless spell and experience very different unemployment and employment outcomes than job switchers. The probability of recall is much less procyclical and volatile than the probability of finding a new employer. We add to a quantitative, and otherwise canonical, search-and-matching model of the labor market a recall option, which can be activated freely following aggregate and job-specific productivity shocks. Recall and search effort significantly amplify the cyclical volatility of new job-finding and separation probabilities.

Suggested Citation

  • Shigeru Fujita & Giuseppe Moscarini, 2017. "Recall and Unemployment," Working Papers 17-29, Federal Reserve Bank of Philadelphia, revised 29 Jun 2017.
  • Handle: RePEc:fip:fedpwp:17-29
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    References listed on IDEAS

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    1. Daniel Borowczyk-Martins & Gregory Jolivet & Fabien Postel-Vinay, 2013. "Accounting For Endogeneity in Matching Function Estimation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 440-451, July.
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    6. Mark Bils & Yongsung Chang & Sun-Bin Kim, 2011. "Worker Heterogeneity and Endogenous Separations in a Matching Model of Unemployment Fluctuations," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(1), pages 128-154, January.
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    Cited by:

    1. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," Review of Economic Studies, Oxford University Press, vol. 84(4), pages 1735-1788.
    2. Bhuller, Manudeep & Kostøl, Andreas & Vigtel, Trond Christian, 2019. "How Broadband Internet Affects Labor Market Matching," Memorandum 10/2019, Oslo University, Department of Economics.
    3. Christopher L. Foote & Richard W. Ryan, 2015. "Labor-Market Polarization over the Business Cycle," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 371-413.
    4. Borowczyk-Martins, Daniel & Lalé, Etienne, 2018. "The Ins and Outs of Involuntary Part-Time Employment," IZA Discussion Papers 11826, Institute of Labor Economics (IZA).
    5. Rainer Eppel & Thomas Horvath & Helmut Mahringer, 2018. "Das Aussetzen von Beschäftigungsverhältnissen als betriebliche Strategie zum Ausgleich von Schwankungen des Personalbedarfs. Ein Update," WIFO Monatsberichte (monthly reports), WIFO, vol. 91(11), pages 799-810, November.
    6. Fatih Karahan & Serdar Ozkan & Jae Song, 2019. "Anatomy of Lifetime Earnings Inequality: Heterogeneity in Job Ladder Risk vs. Human Capital," Staff Reports, Federal Reserve Bank of New York, vol. 0, December.
    7. Joachim Hubmer, 2018. "The Job Ladder and its Implications for Earnings Risk," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 172-194, July.
    8. Daniel Borowczyk-Martins & Etienne Lalé, 2016. "The Rise of Part-time Employment," Sciences Po publications 2016-04, Sciences Po.
    9. Hie Ahn & James Hamilton, 2016. "Heterogeneity and Unemployment Dynamics," Working Papers id:11130, eSocialSciences.
    10. Rasmus Lentz & Jesper Bagger, 2009. "An Empirical Model of Wage Dispersion with Sorting," 2009 Meeting Papers 964, Society for Economic Dynamics.
    11. Alessandro Gavazza & Simon Mongey & Giovanni L. Violante, 2018. "Aggregate Recruiting Intensity," American Economic Review, American Economic Association, vol. 108(8), pages 2088-2127, August.
    12. Hyatt, Henry R. & Spletzer, James R., 2016. "The shifting job tenure distribution," Labour Economics, Elsevier, vol. 41(C), pages 363-377.
    13. Fan, Yanqin & Liu, Ruixuan, 2018. "Partial identification and inference in censored quantile regression," Journal of Econometrics, Elsevier, vol. 206(1), pages 1-38.
    14. Modestino, Alicia Sasser & Shoag, Daniel & Ballance, Joshua, 2016. "Downskilling: changes in employer skill requirements over the business cycle," Labour Economics, Elsevier, vol. 41(C), pages 333-347.
    15. Hall, R.E., 2016. "Macroeconomics of Persistent Slumps," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2131-2181, Elsevier.
    16. Bredemeier, Christian & Juessen, Falko & Winkler, Roland, 2017. "Fiscal Policy and Occupational Employment Dynamics," IZA Discussion Papers 10466, Institute of Labor Economics (IZA).
    17. Ambrocio, Gene & Juselius, Mikael, 2020. "Dealing with the costs of the COVID-19 pandemic – what are the fiscal options?," BoF Economics Review 2/2020, Bank of Finland.
    18. Johannes Wieland & Gabriel Chodorow-Reich, 2015. "Labor Reallocation and Business Cycles," 2015 Meeting Papers 339, Society for Economic Dynamics.
    19. Güell, Maia & Lafuente, Cristina, 2019. "Unemployment Duration Variance Decomposition a la ABS: Evidence from Spain," CEPR Discussion Papers 13610, C.E.P.R. Discussion Papers.
    20. Giuseppe Moscarini & Fabien Postel-Vinay, 2016. "Wage Posting and Business Cycles: a Quantitative Exploration," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 135-160, January.
    21. Edward P. Lazear & Kristin McCue, 2016. "Hires and Separations in Equilibrium," Working Papers 16-57, Center for Economic Studies, U.S. Census Bureau.
    22. Mukoyama, Toshihiko, 2014. "The cyclicality of job-to-job transitions and its implications for aggregate productivity," Journal of Economic Dynamics and Control, Elsevier, vol. 39(C), pages 1-17.
    23. Cristina Lafuente, 2018. "The best of the two worlds: assessing the use of administrative data for the study of employment," ESE Discussion Papers 286, Edinburgh School of Economics, University of Edinburgh.

    More about this item

    Keywords

    unemployment; duration; business cycles; Recall; matching function;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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