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Employer-to-Employer Transitions and Time Aggregation Bias

Antoine Bertheau and Rune Vejlin

No 15030, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The rate at which workers switch employers without experiencing a spell of unemployment is one of the most important labor market indicators. However, Employer-to-Employer (EE) transitions are hard to measure in widely used matched employer-employee datasets such as those available in the US. We investigate how the lack of the exact start and end dates for job spells affect the level and cyclicality of EE transitions using Danish data containing daily information on employment relationships. Defining EE transitions based on quarterly data overestimates the EE transition rate by approximately 30% compared to daily data. The bias is procyclical and is reduced by more than 10% in recessions. We propose an algorithm that uses earnings and not just start and end dates of jobs to redefine EE transitions. Our definition performs better than definitions used in the literature.

Keywords: measurement problems; employer-to-employer transitions; labor market flows; time aggregation bias (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2022-01
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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