Keywords: Gross flows, accessions, separations, on-the-job search, turnover
Abstract: In order to measure the flexibility of the labor market,
evaluate the job-worker matching process, and model business-cycle
dynamics, economists have studied the flows of workers across the
labor market states of employment, unemployment, and not in the
labor force. One important flow that has been poorly measured
is the movement of workers from one employer to another without
any significant intervening period of nonemployment. This paper
exploits the "dependent interviewing" techniques used in the
Current Population Survey since 1994 to estimate such flows.
We find that they are large, and their omission significantly
understates the degree of mobility in the labor market. In 1999,
for example, on average more than 4,000,000 workers changed
employers from one month to the next, about the same number as
left the labor force from employment and more than twice the
number that moved from employment to unemployment.
Close to half of the new jobs started in 1999 represented
employer changes, as did close to half of the separations.
Consistent with previous studies of younger workers, teenagers
exhibit the highest rates of employer-switching, and the rate
declines through about age 40. However, even among prime-aged
workers, about 2 percent change employers each month. Contrary
to the implications of many business cycle models, we find no
evidence that employer-to-employer flows are procyclical, at
least not as the labor market tightened between 1994 and 2000.
This finding raises questions about the ways in which stylized
facts about labor market flows have been used.
Full paper (169 KB PDF)
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Last update: May 1, 2001