Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence

Henry Hyatt and Tucker McElroy ()

LABOUR, 2019, vol. 33, issue 4, 463-487

Abstract: We present time series evidence for the USA 1993–2013 on the relationship between labor reallocation, employment, and earnings using a vector autoregression framework. We find that an increase in labor market churn by 1 percentage point predicts that employment will increase by 100,000–560,000 jobs, lowering the unemployment rate by 0.05–0.25 percentage points. Job destruction does not predict changes in employment but a 1 percentage point increase in job destruction leads to an increase in unemployment 0.14–0.42 percentage points. We find mixed results on the relationship between labor reallocation rates and earnings.

Date: 2019
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https://doi.org/10.1111/labr.12153

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Working Paper: Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence (2017)
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