Job Duration and Match Quality Over the Cycle

Abstract

This paper examines how job quality varies over the cycle. Empirical evidence from the National Longitudinal Survey of Youth (NLSY) suggests match quality is procyclical. This interpretation is corroborated in a calibrated model with on-the-job search. In the model, more high quality matches are observed in expansions because of improved reallocation through on-the-job search. This effect, however, is dominated by lower job destruction in expansions, which preserves matches at the bottom of the quality distribution.

Keywords: Business cycles, search and matching, directed search on-the-job search, match quality, job duration

JEL Classification: E24, E32, J21, J22, J62, J63, J64