The Cyclicality of Separation and Job Finding Rates

16 Pages Posted: 27 Apr 2009

See all articles by Shigeru Fujita

Shigeru Fujita

Federal Reserve Bank of Philadelphia

Garey Ramey

University of California, San Diego (UCSD) - Department of Economics

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Abstract

This article uses CPS gross flow data to analyze the business cycle dynamics of separation and job finding rates and quantify their contributions to overall unemployment variability. Cyclical changes in the separation rate are negatively correlated with changes in productivity and move contemporaneously with them, whereas the job finding rate is positively correlated with and tends to lag productivity. Contemporaneous fluctuations in the separation rate explain between 40 and 50% of fluctuations in unemployment, depending on how the data are detrended. This figure becomes larger when dynamic interactions between the separation and job finding rates are considered.

Suggested Citation

Fujita, Shigeru and Ramey, Garey, The Cyclicality of Separation and Job Finding Rates. International Economic Review, Vol. 50, Issue 2, pp. 415-430, May 2009, Available at SSRN: https://ssrn.com/abstract=1393938 or http://dx.doi.org/10.1111/j.1468-2354.2009.00535.x

Shigeru Fujita (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

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Philadelphia, PA 19106-1574
United States

Garey Ramey

University of California, San Diego (UCSD) - Department of Economics ( email )

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La Jolla, CA 92093-0508
United States
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858-534-7040 (Fax)

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