Employment Duration over the Business Cycle: Quits vs. Firings

Toshihiko Mukoyama and Ismail Baydur ()

No 834, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies the cyclical behavior of employment duration using data from the National Longitudinal Survey of Youth 1979 cohort. We estimate a proportional hazard model under the assumption that job terminations due to different reasons are competing risks. A higher unemployment rate at the start of an employment relationship increases the probability that the worker quits to take or look for another job, but it decreases the probability the firm fires the worker. The net effect of these opposing forces on the overall duration of the employment is negative, but small, implying that match quality is weakly pro-cyclical. We also build a simple job-ladder model to interpret our empirical results.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:834

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