Job Mobility and Sorting: Theory and Evidence

Abstract

Motivated by the canonical (random) on-the-job search model, I measure a person’s ability to sort into preferred jobs by the risk ratio of job-to-job transitions to transitions into unemployment. I show that this measure possesses various desirable features. Making use of the Survey of Income and Program Participation (SIPP), I study the relation between human capital and the risk ratio of job-to-job transitions to transitions into unemployment. Formal education tends to be positively associated with this risk ratio. General experience and occupational tenure have a pronounced negative correlation with both job-to-job transitions and transitions into unemployment, leaving the risk ratio, however, mostly unaffected. In contrast, the estimates suggest that human-capital concepts that take into account the multidimensionality of skills, e.g., versatility, play a prominent role.

Keywords: gross worker flows, job mobility, employer-employer transitions, unemployment, sorting, education, human capital, versatility, SIPP

JEL Classification: J62, J24, I24, I26