On the Driving Forces behind Cyclical Movements in Employment and Job Reallocation
American Economic Review
vol. 89,
no. 5, December 1999
(pp. 1234-1258)
Abstract
Theory restricts short-run job creation and destruction responses and cumulative employment and job reallocation responses to allocative and aggregate shocks. We formulate these restrictions and implement them for postwar data on U.S. manufacturing. Allocative shocks are the main driving force behind cyclical movements in job reallocation, but their contribution to employment fluctuations varies greatly across alternative identification assumptions. Also, the data compel one or both of the following inferences: aggregate shocks greatly alter the shape and not just the mean of the cross-sectional density of employment growth rates; allocative shocks cause short-run reductions in aggregate employment.Citation
Davis, Steven, J., and John Haltiwanger. 1999. "On the Driving Forces behind Cyclical Movements in Employment and Job Reallocation." American Economic Review, 89 (5): 1234-1258. DOI: 10.1257/aer.89.5.1234JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
- E32 Business Fluctuations; Cycles
- J63 Labor Turnover; Vacancies; Layoffs