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On the Driving Forces behind Cyclical Movements in Employment and Job Reallocation

John Haltiwanger and Steven Davis ()

American Economic Review, 1999, vol. 89, issue 5, 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.

JEL-codes: E24 E32 J63 (search for similar items in EconPapers)
Date: 1999
Note: DOI: 10.1257/aer.89.5.1234
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Working Paper: On the Driving Forces Behind Cyclical Movement, in Employment and Job Reallocation (1996) Downloads
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Handle: RePEc:aea:aecrev:v:89:y:1999:i:5:p:1234-1258