The Cyclicality of Job Loss and Hiring

61 Pages Posted: 8 Nov 2006

See all articles by Shigeru Fujita

Shigeru Fujita

Federal Reserve Bank of Philadelphia

Garey Ramey

University of California, San Diego (UCSD) - Department of Economics

Date Written: September 25, 2006

Abstract

In this paper the authors study the cyclical behavior of job loss and hiring using CPS worker flow data, adjusted for margin error and time aggregation error. The band pass filter is used to isolate cyclical components. They consider both total worker flows and transition hazard rates within a unified framework. Our results provide overwhelming support for a separation-driven view of employment adjustment, whereby total job loss and hiring rise sharply during economic downturns, initiated by increases in the job loss hazard rate. Worker flows and transition hazard rates are highly volatile at business cycle frequencies. These patterns are especially strong among prime-age workers. For young workers, job loss and hiring adjust procyclically due to movements into and out of the labor force.

Keywords: Job loss, Hiring, CPS worker flows

JEL Classification: J63, J64

Suggested Citation

Fujita, Shigeru and Ramey, Garey, The Cyclicality of Job Loss and Hiring (September 25, 2006). FRB of Philadelphia Working Paper No. 06-17, Available at SSRN: https://ssrn.com/abstract=936955 or http://dx.doi.org/10.2139/ssrn.936955

Shigeru Fujita (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

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Philadelphia, PA 19106-1574
United States

Garey Ramey

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
858-534-5721 (Phone)
858-534-7040 (Fax)

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