Gross job flows and technology shocks in nondurable and durable goods sectors

Abstract

This paper studies the differences in the dynamics of employment between the nondurable and durable goods sectors. It shows that in the US economy, the durables sector exhibits a higher volatility of employment growth, and a higher relative volatility of job destruction to job creation, than does the nondurables sector. To account for these patterns, a two-sector Mortensen–Pissarides-type model is developed and two types of technology shocks—aggregate and investment-specific—are considered. The numerical results suggest that the model can capture many important features of the sectoral job flows.