The Cyclical Job Ladder

Posted: 7 Sep 2018

See all articles by Giuseppe Moscarini

Giuseppe Moscarini

Cowles Foundation for Research in Economics; Yale University - Department of Economics

Fabien Postel-Vinay

University of Bristol; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Centre for Structural Econometrics (CSE)

Date Written: August 2018


Many theories of labor market turnover generate a job ladder. Due to search frictions, workers earn rents from employment. All workers agree on which jobs are, in this sense, more desirable and slowly climb the job ladder through job-to-job quits. Occasionally, negative shocks throw them off the ladder and back into unemployment. We review a recent body of theory and empirical evidence on labor market turnover through the lens of the job ladder. We focus on the critical role that the job ladder plays in transmitting aggregate shocks, through the pace and direction of employment reallocation, to economic activity and wages and in shaping business cycles more generally. The main evidence concerns worker transitions, both through nonemployment and from job to job, between firms of different sizes, ages, productivity levels, and wage premiums, as well as the resulting earnings growth. Poaching by firms up the ladder is the main engine of reallocation, which shuts down in recessions.

Suggested Citation

Moscarini, Giuseppe and Postel-Vinay, Fabien, The Cyclical Job Ladder (August 2018). Annual Review of Economics, Vol. 10, pp. 165-188, 2018. Available at SSRN: or

Giuseppe Moscarini (Contact Author)

Cowles Foundation for Research in Economics ( email )

Box 208281
New Haven, CT 06520-8281
United States


Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3596 (Phone)


Fabien Postel-Vinay

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Centre for Economic Policy Research (CEPR)

United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

Centre for Structural Econometrics (CSE) ( email )

Department of Economics, University of Bristol
8 Woodland Road
Bristol, BS8 1TN
United Kingdom

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