Labor Market Dynamics and Development

70 Pages Posted: 6 Apr 2020 Last revised: 9 Apr 2020

See all articles by Kevin Donovan

Kevin Donovan

Yale University

Will Jianyu Lu

Central Bank of Chile

Todd Schoellman

Federal Reserve Banks - Federal Reserve Bank of Minneapolis

Date Written: April 2, 2020

Abstract

We build a dataset of harmonized rotating panel labor force surveys covering 42 countries across a wide range of development and document three new empirical findings on labor market dynamics. First, labor market flows (job-finding rates, employment-exit rates, and job-to-job transition rates) are two to three times higher in the poorest as compared with the richest countries. Second, employment hazards in poorer countries decline more sharply with tenure; much of their high turnover can be attributed to high separation rates among workers with low tenure. Third, wage-tenure profiles are much steeper in poorer countries, despite the fact that wage-experience profiles are flatter. We show that these facts are consistent with theories with endogenous separation, particularly job ladder and learning models. We disaggregate our results and investigate possible driving forces that may explain why separation operates differently in rich and poor countries.

Keywords: job flows, job-finding rate, separation rate, selection

JEL Classification: O1, J6

Suggested Citation

Donovan, Kevin and Lu, Will Jianyu and Schoellman, Todd, Labor Market Dynamics and Development (April 2, 2020). Yale University Economic Growth Center Discussion Paper No. 1071, Available at SSRN: https://ssrn.com/abstract=3567390 or http://dx.doi.org/10.2139/ssrn.3567390

Kevin Donovan (Contact Author)

Yale University ( email )

493 College St
New Haven, CT CT 06520
United States

Will Jianyu Lu

Central Bank of Chile ( email )

Publicaciones
Huerfanos 1185
Santiago
Chile

Todd Schoellman

Federal Reserve Banks - Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

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