Unemployment inflows fell from 4 percent of employment per month
in the early 1980s to 2 percent by the mid 1990s. Using low frequency
movements in industry-level data, we estimate that a 1 percentage
point drop in the quarterly job destruction rate lowers the
monthly unemployment inflow rate by 0.28 points. By our estimates,
declines in job destruction intensity account for 28 (55) percent of
the fall in unemployment inflows from 1982 (1990) to 2005. Slower
job destruction accounts for similar fractions of long-term declines
in the rate of unemployment. (JEL E24, E32, J64)
Davis, Steven J., R. Jason Faberman, John Haltiwanger, Ron Jarmin, and Javier Miranda.
"Business Volatility, Job Destruction, and Unemployment."
American Economic Journal: Macroeconomics,
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
Business Fluctuations; Cycles
Unemployment: Models, Duration, Incidence, and Job Search