An Econometric Study of Quits Rate Trends in the United States since the Great Recession: Cyclical Movement or Structural Change?

Abstract

This paper attempts to identify the possible reasons behind a drop of the quits rate in the period since the Great Recession. (As defined by the U.S. Bureau of Labor Statistics, the quits rate is the number of quits during the entire month as a percent of total employment.) The paper examines several essential questions on the quits rate using econometric models and analysis: What are the crucial determinants that explain the movements in the quits rate? Is the postrecession stagnation of the quits rate a result of current cyclical macroeconomic conditions, or does it reflect a structural change? As far as we know, no recent research has attempted to model this indicator to answer these questions. Quits rate data have been systematically collected by the Bureau of Labor Statistics through the Job Opening and Labor Turnover Survey (JOLTS) only since the end of year 2000. By dividing our data set into 12 industrial categories and four regions, we are able to come up with empirical models to explain quits rate behavior over a consecutive time span and also across industries and regions. After developing our model, we are then able to examine if there is evidence of structural change using several methods.