U.S. Labor Market Dynamics Revisited
The picture of U.S. labor market dynamics is opaque. Empirical studies of U.S. gross worker flows have yielded contradictory findings, and it is not easy to get a sense of the key moments of the data. Debates have emerged regarding the implications of these flows for the understanding of the business cycle. The early view was that worker separations from jobs are the more dominant cyclical phenomenon (relative to the hirings of workers), and that therefore it is important to analyze the causes for separations or job destruction. Later, this view was challenged by the claim that separations are roughly constant over the cycle, and that the key to the understanding of the business cycle is in the cyclical behavior of the job finding rate. This paper aims at clarifying the picture, trying to determine what facts can be established, what are their implications for the business cycle, and what remains to be further investigated. The main findings are: (i) There is considerable cyclicality and volatility of both accessions and separations. Hence, both are important for the understanding the business cycle. The paper delineates the key business cycle facts of the labor market. (ii) The major remaining problems, in need of further study, are the disparities in the measurement of flows between employment and the pool of workers out of the labor force, disagreements on the relative volatility of job finding and separation rates across data sets, and the fact that the fit of the gross flows data with net employment growth data differs across studies and is not high.
|Date of creation:||Nov 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dale T. Mortensen & Christopher A. Pissarides, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 397-415.
- Joseph A. Ritter, 1993. "Measuring labor market dynamics: gross flows of workers and jobs," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 39-57.
- Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006.
"The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links,"
NBER Working Papers
12167, National Bureau of Economic Research, Inc.
- Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 3-26, Summer.
- Abowd, John M & Zellner, Arnold, 1985. "Estimating Gross Labor-Force Flows," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(3), pages 254-83, June.
- Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
- Bruce C. Fallick & Charles A. Fleischman, 2004. "Employer-to-employer flows in the U.S. labor market: the complete picture of gross worker flows," Finance and Economics Discussion Series 2004-34, Board of Governors of the Federal Reserve System (U.S.).
- Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-90, September.
- Robert Shimer, 2007.
American Economic Review,
American Economic Association, vol. 97(4), pages 1074-1101, September.
- Steven J. Davis & John Haltiwanger, 1995.
"Measuring Gross Worker and Job Flows,"
NBER Working Papers
5133, National Bureau of Economic Research, Inc.
- repec:oup:restud:v:61:y:1994:i:3:p:397-415 is not listed on IDEAS
- Robert Shimer, 2007.
"Reassessing the Ins and Outs of Unemployment,"
NBER Working Papers
13421, National Bureau of Economic Research, Inc.
- Stephen R. G. Jones & W. Craig Riddell, 2006.
"Unemployment and Nonemployment: Heterogeneities in Labor Market States,"
The Review of Economics and Statistics,
MIT Press, vol. 88(2), pages 314-323, May.
- Stephen R.G. Jones & W. Craig Riddell, 2002. "Unemployment and Non-Employment: Heterogeneities in Labour Market States," Department of Economics Working Papers 2002-05, McMaster University.
- Stephen R. G. Jones & Craig Riddell, 2000. "The Dynamics of US Labor Force Attachment," Econometric Society World Congress 2000 Contributed Papers 0011, Econometric Society.
- Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
- Hoyt Bleakley & Ann E. Ferris & Jeffrey C. Fuhrer, 1999. "New data on worker flows during business cycles," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 49-76.
- John Haltiwanger & Marilyn E. Manser & Robert Topel, 1998. "Labor Statistics Measurement Issues," NBER Books, National Bureau of Economic Research, Inc, number halt98-1, December.
- Robert E. Hall, 2005. "Job Loss, Job Finding, and Unemployment in the U.S. Economy Over the Past Fifty Years," NBER Working Papers 11678, National Bureau of Economic Research, Inc.
- Poterba, James M & Summers, Lawrence H, 1986. "Reporting Errors and Labor Market Dynamics," Econometrica, Econometric Society, vol. 54(6), pages 1319-38, November.
- Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2455. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.