VACANCY CHAINS

Michael Elsby, Ryan Michaels and David Ratner
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David Ratner: https://www.federalreserve.gov/econres/david-d-ratner.htm

No 20-28, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Replacement hiring—recruitment that seeks to replace positions vacated by workers who quit—plays a central role in establishment dynamics. We document this phenomenon using rich microdata on U.S. establishments, which frequently report no net change in their employment, often for years at a time, despite facing substantial gross turnover in the form of quits. We propose a model in which replacement hiring is driven by the presence of a putty-clay friction in the production structure of establishments. Replacement hiring induces a novel positive feedback channel through which an initial rise in vacancy posting induces still more vacancy posting to replace employees who are poached. This vacancy chain in turn induces volatile responses of vacancies, and thereby unemployment, to cyclical shocks.

Keywords: Quits; replacement hiring; unemployment; vacancies; business cycles (search for similar items in EconPapers)
JEL-codes: E32 J63 J64 (search for similar items in EconPapers)
Pages: 36
Date: 2020-07-30
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
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Related works:
Working Paper: Vacancy Chains (2022)
Working Paper: Vacancy Chains (2017)
Working Paper: Vacancy Chains (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedpwp:88450

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DOI: 10.21799/frbp.wp.2020.28

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