Worker Flows and Job Flows: A Quantitative Investigation

39 Pages Posted: 30 Mar 2013

See all articles by Shigeru Fujita

Shigeru Fujita

Federal Reserve Bank of Philadelphia

Makoto Nakajima

Federal Reserve Bank of Philadelphia

Multiple version iconThere are 4 versions of this paper

Date Written: February 15, 2013

Abstract

This paper studies the quantitative properties of a multiple-worker firm matching model with on-the-job search where heterogeneous firms operate decreasing-returns-to-scale production technology. The authors focus on the model's ability to replicate the business cycle features of job flows, worker flows between employment and unemployment, and job-to-job transitions. The calibrated model successfully replicates (i) countercyclical worker flows between employment and unemployment, (ii) procyclical job-to-job transitions, and (iii) opposite movements of job creation and destruction rates over the business cycle. The cyclical properties of worker flows between employment and unemployment differ from those of job flows, partly because of the presence of job-to-job transitions. The authors also show, however, that job flows measured by net employment changes differ significantly from total worker separation and accession rates, because separations also occur at firms with positive net employment changes, and similarly firms that are shrinking on net may hire workers to partially offset attritions. The presence of job-to-job transitions is the key to producing these differences.

Keywords: Job Flows, Worker Flows, Multiple-worker Firm, Search and Matching

JEL Classification: E24, E32, J63, J64

Suggested Citation

Fujita, Shigeru and Nakajima, Makoto, Worker Flows and Job Flows: A Quantitative Investigation (February 15, 2013). FRB of Philadelphia Working Paper No. 13-9, Available at SSRN: https://ssrn.com/abstract=2235857 or http://dx.doi.org/10.2139/ssrn.2235857

Shigeru Fujita (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Makoto Nakajima

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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