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Employer-to-Employer Transitions and Time Aggregation Bias

Author

Listed:
  • Bertheau, Antoine

    (Norwegian School of Economics)

  • Vejlin, Rune Majlund

    (Aarhus University)

Abstract

The rate at which workers switch employers without experiencing a spell of unemployment is one of the most important labor market indicators. However, Employer-to-Employer (EE) transitions are hard to measure in widely used matched employer-employee datasets such as those available in the US. We investigate how the lack of the exact start and end dates for job spells affect the level and cyclicality of EE transitions using Danish data containing daily information on employment relationships. Defining EE transitions based on quarterly data overestimates the EE transition rate by approximately 30% compared to daily data. The bias is procyclical and is reduced by more than 10% in recessions. We propose an algorithm that uses earnings and not just start and end dates of jobs to redefine EE transitions. Our definition performs better than definitions used in the literature.

Suggested Citation

  • Bertheau, Antoine & Vejlin, Rune Majlund, 2022. "Employer-to-Employer Transitions and Time Aggregation Bias," IZA Discussion Papers 15030, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15030
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    References listed on IDEAS

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    Cited by:

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    2. John Haltiwanger & Henry Hyatt & Erika McEntarfer & Matthew Staiger, 2025. "Cyclical Worker Flows: Cleansing vs. Sullying," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 55, January.

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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