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Employment Duration over the Business Cycle: Quits vs. Firings

Author

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  • Toshihiko Mukoyama

    (University of Virginia)

  • Ismail Baydur

    (ADA University)

Abstract

This paper studies the cyclical behavior of employment duration using data from the National Longitudinal Survey of Youth 1979 cohort. We estimate a proportional hazard model under the assumption that job terminations due to different reasons are competing risks. A higher unemployment rate at the start of an employment relationship increases the probability that the worker quits to take or look for another job, but it decreases the probability the firm fires the worker. The net effect of these opposing forces on the overall duration of the employment is negative, but small, implying that match quality is weakly pro-cyclical. We also build a simple job-ladder model to interpret our empirical results.

Suggested Citation

  • Toshihiko Mukoyama & Ismail Baydur, 2015. "Employment Duration over the Business Cycle: Quits vs. Firings," 2015 Meeting Papers 834, Society for Economic Dynamics.
  • Handle: RePEc:red:sed015:834
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    References listed on IDEAS

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    1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    2. Jose Mustre-del-Rio, 2012. "Job duration and the cleansing and sullying effects of recessions," Research Working Paper RWP 12-08, Federal Reserve Bank of Kansas City.
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