Vacancy Chains

Michael Elsby, Axel Gottfries (axel.gottfries@ed.ac.uk), Ryan Michaels and David Ratner
Additional contact information
Axel Gottfries: https://www.ed.ac.uk/profile/axel-gottfries
David Ratner: https://www.federalreserve.gov/econres/david-d-ratner.htm

No 22-23, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Replacement hiring—recruitment that seeks to replace positions vacated by workers who quit—plays a central role in establishment dynamics. We document this phenomenon using rich microdata on U.S. establishments, which frequently report no net change in their employment, often for years at a time, despite facing substantial gross turnover in the form of quits. We devise a tractable model in which replacement hiring is driven by a novel structure of frictions, combining firm dynamics, on-the-job search, and investments into job creation that are sunk at the point of replacement. A key implication is the emergence of vacancy chains. Quantitatively, the model reconciles the incidence of replacement hiring with the large dispersion of labor productivity across establishments, and largely replicates the empirical volatility and persistence of job creation and, thereby, unemployment.

Keywords: Quits; replacement hiring; unemployment; vacancies; business cycles (search for similar items in EconPapers)
JEL-codes: E32 J60 J63 J64 (search for similar items in EconPapers)
Pages: 80
Date: 2022-08-19
New Economics Papers: this item is included in nep-dge and nep-hrm
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Related works:
Working Paper: VACANCY CHAINS (2020)
Working Paper: Vacancy Chains (2017)
Working Paper: Vacancy Chains (2016)
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DOI: 10.21799/frbp.wp.2022.23

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