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

Benjamin Schoefer and Yusuf Mercan

No 14208, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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% of vacancy postings as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly tracks 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.

Date: 2019-12
New Economics Papers: this item is included in nep-dge
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Journal Article: Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains (2020)
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