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Declining Worker Turnover: the Role of Short Duration Employment Spells

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  • Michael J. Pries
  • Richard Rogerson

Abstract

Using the Quarterly Workforce Indicators, we document that a significant amount of the decline in labor market turnover during the last two decades is accounted for by the decline in employment spells that last less than a quarter. Using a search and matching model that incorporates noisy signals about the quality of a worker-firm match, we show that improved candidate screening by firms can account for the decline in short-lived employment spells. Quantitative exercises show that this explanation can account for the observed changes in various labor market outcomes, whereas alternative potential explanations, such as increased hiring costs, cannot.

Suggested Citation

  • Michael J. Pries & Richard Rogerson, 2019. "Declining Worker Turnover: the Role of Short Duration Employment Spells," NBER Working Papers 26019, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:26019
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    References listed on IDEAS

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    1. Mitchell Hoffman & Lisa B Kahn & Danielle Li, 2018. "Discretion in Hiring," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 765-800.
    2. Robert E. Hall & Sam Schulhofer-Wohl, 2018. "Measuring Job-Finding Rates and Matching Efficiency with Heterogeneous Job-Seekers," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 1-32, January.
    3. Raven Molloy & Christopher L. Smith & Riccardo Trezzi & Abigail Wozniak, 2016. "Understanding Declining Fluidity in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 183-259.
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    1. Bhuller, Manudeep & Kostøl, Andreas & Vigtel, Trond Christian, 2019. "How Broadband Internet Affects Labor Market Matching," Memorandum 10/2019, Oslo University, Department of Economics.
    2. Raven Molloy & Christopher Smith & Abigail K. Wozniak, 2020. "Changing Stability in U.S. Employment Relationships: A Tale of Two Tails," NBER Working Papers 26694, National Bureau of Economic Research, Inc.
    3. Serdar Birinci & Kurt See & Shu Lin Wee, 2020. "Job Applications and Labor Market Flows," Working Papers 2020-023, Federal Reserve Bank of St. Louis, revised Jan 2023.
    4. 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).
    5. Bachmann, Rüdiger & Bayer, Christian & Merkl, Christian & Seth, Stefan & Stüber, Heiko & Wellschmied, Felix, 2021. "Worker churn in the cross section and over time: New evidence from Germany," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 781-797.
    6. Kevin Donovan & Will Jianyu Lu & Todd Schoellman, 2020. "Labor Market Dynamics and Development," Staff Report 596, Federal Reserve Bank of Minneapolis.
    7. Charles L. Baum, 2022. "Seven jobs in a lifetime? An analysis of employee tenure," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 543-567, April.

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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
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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