Trend Employment Growth and the Bunching of Job Creation and Destruction

Christopher Foote

Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: Research using US manufacturing data finds that job destruction fluctuates more over time than job creation, but some new data indicates that this behavior is not shared in growing sectors, where job creation varies more. An explanation for this finding based on the interaction between (S,s)-type adjustment and trend employment growth delivers some tight predictions for the relationship between trend growth and the volatility of creation relative to destruction. Though it scores some notable successes, the simple (S,s)-based model augmented with a low-frequency trend cannot fully account for the strength of the empirical relationship between relative gross-flow volatility and trend growth across one--digit industries.

Date: 1998
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