Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains

41 Pages Posted: 14 Jan 2020

See all articles by Benjamin Schoefer

Benjamin Schoefer

University of California, Berkeley

Yusuf Mercan

University of Melbourne

Date Written: December 2019

Abstract

In the canonical DMP model of job openings, all job openings stem from new job creation. Jobs denote worker-firm matches, which are destroyed following worker quits. Yet, employers classify 56% of vacancy postings as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly tracks quits. We augment the DMP model with longer-lived jobs arising from sunk job creation costs and replacement hiring. Quits trigger vacancies, which beget vacancies through replacement hiring. This vacancy chain can raise total job openings and net employment. The procyclicality of quits can thereby amplify business cycles.

Suggested Citation

Schoefer, Benjamin and Mercan, Yusuf, Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains (December 2019). CEPR Discussion Paper No. DP14208. Available at SSRN: https://ssrn.com/abstract=3518546

Benjamin Schoefer

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Yusuf Mercan (Contact Author)

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

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