The cyclicality of job loss and hiring

Shigeru Fujita and Garey Ramey

No 06-17, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: In this paper the authors study the cyclical behavior of job loss and hiring using CPS worker flow data, adjusted for margin error and time aggregation error. The band pass filter is used to isolate cyclical components. They consider both total worker flows and transition hazard rates within a unified framework. Our results provide overwhelming support for a \"separation-driven\" view of employment adjustment, whereby total job loss and hiring rise sharply during economic downturns, initiated by increases in the job loss hazard rate. Worker flows and transition hazard rates are highly volatile at business cycle frequencies. These patterns are especially strong among prime-age workers. For young workers, job loss and hiring adjust procyclically due to movements into and out of the labor force.

Keywords: Employment (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-lab and nep-mac
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Citations: View citations in EconPapers (79)

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Working Paper: The Cyclicality of Job Loss and Hiring (2006)
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