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Job flows, jobless recoveries, and the Great Moderation

Jason Faberman ()

Journal of Economic Dynamics and Control, 2017, vol. 76, issue C, 152-170

Abstract: This paper explores a link between the decline in employment volatility and the onset of jobless recoveries observed since the mid-1980s using a time series of job flow estimates for manufacturing that covers the entire postwar period. I show that job creation and job destruction rates have fallen and become less cyclical. This has increased the importance of reallocative shocks relative to aggregate shocks in explaining their time-series fluctuations. Despite the increased importance of reallocation, it is a change in the responses of job flows to aggregate shocks, which are now larger and more persistent, that lead to the onset of jobless recoveries. The decline in the cyclicality of temporary layoffs and the rise in the use of employment services cannot account for these altered responses.

Keywords: Gross job flows; Jobless recoveries; Great Moderation; Business dynamism; Job reallocation (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Job flows, jobless recoveries, and the Great Moderation (2008) Downloads
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Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

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