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Declining labor turnover and turbulence

Shigeru Fujita
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Shigeru Fujita: Federal Reserve Bank of Philadelphia

No 15-29, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Superseded by 18-06. The purpose of this paper is to identify possible sources of the secular decline in the job separation rate over the past four decades. I use a simple labor matching model with two types of workers, experienced and inexperienced, where the former type faces a risk of skill loss during unemployment. When the skill loss occurs, the worker is required to restart his career and thus suffers a drop in his wage. I show that a higher risk of skill loss results in a lower separation rate. The key mechanism is that the experienced workers accept lower wages in exchange for keeping their jobs.

Keywords: Separation Rate; Wage Loss; Turbulence (search for similar items in EconPapers)
JEL-codes: E24 J31 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Date: 2015-08-07, Revised 2018-02-02
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