Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence

72 Pages Posted: 27 Jan 2017

See all articles by Henry R. Hyatt

Henry R. Hyatt

U.S. Census Bureau - Center for Economic Studies

Tucker McElroy

U.S. Census Bureau - Center for Statistical Research and Methodology

Date Written: January 01, 2017

Abstract

An increasing number of data sources have measured the components of reallocation of jobs across employers and workers across jobs. Whether and how job reallocation across employers and excess worker “churn” affect other measures of the health of the U.S. economy remains an open question. In this paper, we present time series evidence for the U.S. 1993-2013 and consider the relationship between labor reallocation, employment, and earnings using a vector autoregression (VAR) framework. We find that labor market churn Granger-causes higher employment and lower unemployment, while job destruction does the opposite. We also find more limited evidence that churn and job destruction predict increased earnings, although this is not found for all earnings measures.

Suggested Citation

Hyatt, Henry R. and McElroy, Tucker, Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence (January 01, 2017). US Census Bureau Center for Economic Studies Paper No. CES-WP-17-11, Available at SSRN: https://ssrn.com/abstract=2906328 or http://dx.doi.org/10.2139/ssrn.2906328

Henry R. Hyatt (Contact Author)

U.S. Census Bureau - Center for Economic Studies ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Tucker McElroy

U.S. Census Bureau - Center for Statistical Research and Methodology ( email )

4600 Silver Hill Road
Washington, DC 20233-9100
United States

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