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Job-Finding and Job-Losing: A Comprehensive Model of Heterogeneous Individual Labor-Market Dynamics

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  • Robert E. Hall
  • Marianna Kudlyak

Abstract

We study the paths over time that individuals follow in the labor market, as revealed in the monthly Current Population Survey. Some people face much higher flow values from work than in a non-market activity; if they lose a job, they find another soon. Others have close to equal flow values and tend to circle through jobs, search, and non- market activities. And yet others have flow values for non-market activities that are higher than those in the market, and do not work. We develop a model that identifies and quantifies heterogeneity in dynamic individual behavior. Our model provides a bridge between research on monthly transition rates in the tradition of Blanchard and Diamond (1990) and research on economic dynamics in the tradition of Mortensen and Pissarides (1994). Our estimates discern 5 distinct types. Most unemployment comes from just two of those types. Low employment types frequently circle among unemployment, short-term jobs, and being out of the labor market. Short-term jobs play a role in the job-finding process related to the role of unemployment. These are stop-gap jobs for high-employment types and a part of circling for low-employment types. Because of their high job-finding rates, and despite their low flow values of non- work relative to work, the volatility of the future lifetime value that high-employment types derive from work and non-work is lower than for low-employment types.

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  • Robert E. Hall & Marianna Kudlyak, 2019. "Job-Finding and Job-Losing: A Comprehensive Model of Heterogeneous Individual Labor-Market Dynamics," NBER Working Papers 25625, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25625
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    3. Raven Molloy & Christopher L. Smith & Abigail Wozniak, 2024. "Changing Stability in U.S. Employment Relationships: A Tale of Two Tails," Journal of Human Resources, University of Wisconsin Press, vol. 59(1), pages 35-69.
    4. Carrillo-Tudela, Carlos & Launov, Andrey & Robin, Jean-Marc, 2021. "The fall in german unemployment: A flow analysis," European Economic Review, Elsevier, vol. 132(C).
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    6. Chodorow-Reich, Gabriel & Coglianese, John, 2021. "Projecting unemployment durations: A factor-flows simulation approach with application to the COVID-19 recession," Journal of Public Economics, Elsevier, vol. 197(C).
    7. Hie Joo Ahn & James Hamilton, 2022. "Measuring Labor-Force Participation and the Incidence and Duration of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 1-32, April.
    8. Alexander Bick & Adam Blandin, 2023. "Employer Reallocation During the COVID-19 Pandemic: Validation and Application of a Do-It-Yourself CPS," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 58-76, July.
    9. Guimarães, Luís & Mazeda Gil, Pedro, 2022. "Looking ahead at the effects of automation in an economy with matching frictions," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    10. Victoria Gregory & Guido Menzio & David G. Wiczer, 2021. "The Alpha Beta Gamma of the Labor Market," NBER Working Papers 28663, National Bureau of Economic Research, Inc.
    11. Jyotirmoy Bhattacharya, 2023. "Indian Urban Workers’ Labour Market Transitions," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 66(2), pages 471-494, June.
    12. Mueller, Andreas I. & Spinnewijn, Johannes, 2023. "The Nature of Long-Term Unemployment: Predictability, Heterogeneity and Selection," IZA Discussion Papers 15955, Institute of Labor Economics (IZA).
    13. Finkelstein Shapiro, Alan & Olivero, Maria Pia, 2020. "Lending relationships and labor market dynamics," European Economic Review, Elsevier, vol. 127(C).
    14. Victoria Gregory, 2023. "Labor Force Exiters around Recessions: Who Are They?," Review, Federal Reserve Bank of St. Louis, vol. 105(1), pages 9-20, January.
    15. Hie Joo Ahn & James Hamilton, 2022. "Measuring Labor-Force Participation and the Incidence and Duration of Unemployment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 44, pages 1-32, April.
    16. Hall, Robert E. & Kudlyak, Marianna, 2022. "The unemployed with jobs and without jobs," Labour Economics, Elsevier, vol. 79(C).
    17. Alexander Bick & Adam Blandin, 2023. "Employer Reallocation During the COVID-19 Pandemic: Validation and Application of a Do-It-Yourself CPS," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 58-76, July.
    18. Victoria Gregory & Guido Menzio & David Wiczer, 2020. "Pandemic Recession: L- or V-Shaped?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 40(01), pages 1-31, May.
    19. Jyotirmoy Bhattacharya, 2021. "Indian urban workers' labour market transitions," Papers 2110.05482, arXiv.org, revised Nov 2021.
    20. Guido Menzio, 2023. "Stubborn Beliefs in Search Equilibrium," NBER Macroeconomics Annual, University of Chicago Press, vol. 37(1), pages 239-297.
    21. Reuben Ellul, "undated". "Timing the Maltese business cycle: A historical perspective," CBM Working Papers WP/01/2021, Central Bank of Malta.
    22. Martin Garcia-Vazquez, 2021. "Identification and Estimation of Non-stationary Hidden Markov Models," Working Papers 2021-023, Human Capital and Economic Opportunity Working Group.
    23. Garibaldi, Pietro & Gomes, Pedro Maia, 2022. "Temporary Replacement Workers in a Matching Model with Employment at Will," IZA Discussion Papers 15503, Institute of Labor Economics (IZA).

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    More about this item

    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
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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