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Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains

Yusuf Mercan and Benjamin Schoefer

American Economic Review: Insights, 2020, vol. 2, issue 1, 101-24

Abstract: In the canonical DMP model of job openings, all job openings stem from new job creation. Jobs denote worker-firm matches, which are destroyed following worker quits. Yet, employers classify 56 percent of vacancies as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly track quits. We augment the DMP model with longer-lived jobs arising from sunk job creation costs and replacement hiring. Quits trigger vacancies, which beget vacancies through replacement hiring. This vacancy chain can raise total job openings and net employment. The procyclicality of quits can thereby amplify business cycles.

JEL-codes: E24 E32 J23 J31 J63 (search for similar items in EconPapers)
Date: 2020
Note: DOI: 10.1257/aeri.20190023
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