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Cyclical Labor Market Sorting

Author

Listed:
  • Leland Crane

    (Federal Reserve Board)

  • Henry Hyatt

    (US Census Bureau)

  • Seth Murray

    (University of Maryland)

Abstract

We consider sorting in the labor market, that is, whether high or low productivity workers and firms tend to match with each other, and how this varies cyclically using U.S. matched employer-employee data for recent decades. Although there is considerable disagreement in the nature and extent of assortative matching among different methods for ranking workers and firms, we consistently find that the productivity composition of workers and firms moves in opposite directions over the business cycle. During and after recessions, low-productivity workers leave the labor market, while low-productivity firms gain as a share of employment, so positive assortative matching is greatest in magnitude in the early stages of economic contractions. These results are consistent with differences between workers, rather than firms, driving the value of output, which we demonstrate using a model of labor market search.

Suggested Citation

  • Leland Crane & Henry Hyatt & Seth Murray, 2018. "Cyclical Labor Market Sorting," 2018 Meeting Papers 939, Society for Economic Dynamics.
  • Handle: RePEc:red:sed018:939
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    File URL: https://economicdynamics.org/meetpapers/2018/paper_939.pdf
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    References listed on IDEAS

    as
    1. John C. Haltiwanger & Henry R. Hyatt & Lisa B. Kahn & Erika McEntarfer, 2018. "Cyclical Job Ladders by Firm Size and Firm Wage," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 52-85, April.
    2. John Haltiwanger & Ron S. Jarmin & Robert Kulick & Javier Miranda, 2016. "High Growth Young Firms: Contribution to Job, Output, and Productivity Growth," NBER Chapters,in: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges, pages 11-62 National Bureau of Economic Research, Inc.
    3. John Haltiwanger & Henry Hyatt & Erika McEntarfer, 2018. "Who Moves Up the Job Ladder?," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 301-336.
      • John Haltiwanger & Henry Hyatt & Erika McEntarfer, 2015. "Who Moves Up the Job Ladder?," NBER Chapters,in: Firms and the Distribution of Income: The Roles of Productivity and Luck National Bureau of Economic Research, Inc.
    4. David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 633-686.
    5. Jaison R. Abel & Richard Deitz, 2017. "Underemployment in the Early Careers of College Graduates following the Great Recession," NBER Chapters,in: Education, Skills, and Technical Change: Implications for Future U.S. GDP Growth, pages 149-181 National Bureau of Economic Research, Inc.
    6. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
    7. Henry Hyatt & Erika McEntarfer & Kevin McKinney & Stephen Tibbets & Doug Walton, 2014. "JOB-TO-JOB (J2J) Flows: New Labor Market Statistics From Linked Employer-Employee Data," Working Papers 14-34, Center for Economic Studies, U.S. Census Bureau.
    8. Cody Henderson & Henry Hyatt, 2012. "Estimation of Job-to-Job Flow Rates under Partially Missing Geography," Working Papers 12-29, Center for Economic Studies, U.S. Census Bureau.
    9. Joyce Hahn & Henry Hyatt & Hubert Janicki, 2018. "Job Ladders and Growth in Earnings, Hours, and Wages," 2018 Meeting Papers 908, Society for Economic Dynamics.
    10. Giuseppe Moscarini & Fabien Postel-Vinay, 2012. "The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment," American Economic Review, American Economic Association, vol. 102(6), pages 2509-2539, October.
    11. repec:ucp:jpolec:doi:10.1086/695505 is not listed on IDEAS
    12. repec:aea:aecrev:v:107:y:2017:i:5:p:358-63 is not listed on IDEAS
    13. Joyce K. Hahn & Henry R. Hyatt & Hubert P. Janicki & Stephen R. Tibbets, 2017. "Job-to-Job Flows and Earnings Growth," American Economic Review, American Economic Association, vol. 107(5), pages 358-363, May.
    14. Nellie Zhao & Henry Hyatt & Isabel Cairo, 2015. "The U.S. Job Ladder in the New Millennium," 2015 Meeting Papers 893, Society for Economic Dynamics.
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    Cited by:

    1. Cynthia L. Doniger, 2019. "Do Greasy Wheels Curb Inequality?," Finance and Economics Discussion Series 2019-021, Board of Governors of the Federal Reserve System (US).

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