Job Flows Research Articles

Sudden Stops, Financial Frictions, and Labor Market Flows: Evidence from Latin America

Sudden stops and international financial crises have been a main feature of developing countries in the last three decades. While their aggregate effects are well known, the disaggregated channels through which they work are not well explored yet. In this paper, we study the sectoral responses that take place over episodes of sudden stops. Using job flows from a sectoral panel dataset for four Latin American countries, we find that sudden stops are characterized as periods of lower job creation and increased job destruction. Moreover, these effects are heterogeneous across sectors: we find that when a sudden stop occurs, sectors with higher dependence on external financing experience lower job creation. In turn, sectors with higher liquidity needs experience significantly larger job destruction. This evidence is consistent with the idea that dependence on external financing affects mainly the creation margin and that exposure to liquidity conditions affects mainly the destruction margin. Overall, our results confirm the large labor market effects of sudden stops, and provide evidence of financial conditions being an important transmission channel of sudden stops within a country, highlighting the role of financial frictions in the restructuring process in general.

Employment Protection and Gross Job Flows: A Differences-in-Differences Approach

This paper examines the effect of employment protection regulation on gross job flows in a sample of developed and developing countries. By implementing a differences-in-differences test we lessen the potentially severe endogeneity and omitted variable problems associated with cross-country regressions. This test is based on the hypothesis that job security regulations are more binding in some sectors of economic activity than in others, depending on sector-specific characteristics such as the variance of demand or technological shocks. Unlike most of the existing literature, our analysis indicates that more stringent job security regulations slow down gross job flows, and this tendency is more pronounced in sectors that require higher labor flexibility. These effects occur within the sample of developed and developing countries and are very large in magnitude. Moreover, these effects are robust to changes in regulatory measures, measurement of sector flexibility requirements, control variables and samples.

Sustained High Rates Of Job Creation And Destruction In Substate Economies

<p class="Ariel12" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: "Times New Roman","serif"; font-size: 10pt; mso-bidi-font-style: italic;">Widely utilized net employment change statistics actually mask an extremely volatile process of job creation and destruction.<span style="mso-spacerun: yes;">  </span>In the past decade economists have addressed this problem by exploiting newly available longitudinal data series to estimate these job flows and the subsequent amount of job churning at the national, state and MSA level.<span style="mso-spacerun: yes;">  </span>This study is unique in that it uses an innovative technique to capture job flows within and between industries at the local area level where longitudinal BLS data series are not available. </span></p><p class="Ariel12" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: "Times New Roman","serif"; font-size: 10pt; mso-bidi-font-style: italic;"> </span></p><p class="Ariel12" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: "Times New Roman","serif"; font-size: 10pt; mso-bidi-font-style: italic;">The geographic unit of analysis in this paper is a Cohesive Commercial Statistical Area™ (CCSA), a substate aggregate of cities and towns sharing common economic interests but not a Metropolitan Statistical Area.<span style="mso-spacerun: yes;">  </span>The paper examines job flows in two very different Massachusetts substate economies: the MetroWest CCSA, a technology sensitive research and development economy, and the South Shore CCSA, a mature economy with a competitive edge in financial services. This study establishes that a sizable portion of disaggregated job flows can be captured at a substate level using available employment data. Building upon techniques used in earlier studies, the authors confirmed very high levels of employment volatility, “job churning”, in both substate regions. </span></p><p class="Ariel12" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt; mso-bidi-font-style: italic;"><span style="font-family: Arial;"> </span></span></p><p class="Ariel12" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: "Times New Roman","serif"; font-size: 10pt; mso-bidi-font-style: italic;">The authors found that over two decades, job reallocation rates in MetroWest averaged 9%, affecting one out of 11 jobs annually. The study traced the pattern of job creation and destruction over the course of local business cycles and found that both job creation and destruction existed during all phases of the business cycle. Although, as expected, job creation dominated the expansion phase and destruction dominated the contraction phase, the total amount of job reallocation (creation plus destruction) remained relatively stable through all stages of the business cycle.<span style="mso-spacerun: yes;">   </span>However, the composition of the job reallocation varied dramatically by stage of business cycle.<span style="mso-spacerun: yes;">  </span>A Job Replacement Ratio has been developed as a quick test to confirm economic expansion or contraction and to focus economic development efforts.</span></p>

Job security and employee well-being: Evidence from matched survey and register data

We examine the effects of establishment- and industry-level labor market turnover on employees' well-being. The linked employer-employee panel data contain both survey information on employees' subjective well-being and comprehensive register-based information on job and worker flows. We test for the existence of compensating wage differentials by explaining wages and job satisfaction with average uncertainties, measured by an indicator for a high excessive turnover (churning) rate. The results are consistent with the theory of compensating wage differentials, since high uncertainty increases real wages, but high uncertainty has no effect on job satisfaction while not controlling for wages.

Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms

Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms

Hybridising PCA and BPN for job flow time forecasting in a wafer fabrication factory

Principal Component Analysis (PCA) is a multivariate statistical analysis method. This method constructs a series of linear combinations of the original variables to form a new variable, so that these new variables are unrelated to each other as much as possible, to reflect information in a better way. A PCA and Back Propagation Network (PCA–BPN) approach is proposed in this study for forecasting the flow time of a job in a wafer fabrication factory, which is a critical task to the wafer fabrication factory. For evaluating the effectiveness of the proposed methodology, Production Simulation (PS) is also applied in this study to generate some test data.

Employment and Exchange Rates: The Role of Openness and Technology

Real exchange rate movements are important drivers of the reallocation of resources between sectors of the economy. Economic theory suggests that the impact of exchange rates should vary with the degree of exposure to international competition and with the technology level. This paper contributes by bringing together these two views, both theoretically and empirically. We show that both the degree of openness and the technology level mediate the impact of exchange rate movements on labour market developments. According to our estimations, whereas employment in high-technology sectors seems to be relatively immune to changes in real exchange rates, these appear to have sizable and significant effects on highly open low-technology sectors. The analysis of job flows suggests that the impact of exchange rates on these sectors occurs through employment destruction.

Turnover and Excess Worker Reallocation. The Veneto Labour Market between 1982 and 1996

This research exploits a large matched employer–employee data set for an Italian region, the Veneto, that is presented here for the first time, in order to analyse job and worker flows. In a first part, the paper computes worker turnover, job turnover, and excess worker reallocation over a time span of 14 years. The results are discussed, and comparisons are made between the quantitative features of the labour market in the Veneto region and those of other labour markets. In a second part, turnover and excess worker reallocation are related to search costs, and new empirical evidence is presented that helps in understanding the connections between search activity, unemployment, and the economic cycle.

Metadata Creation, Transformation and Discovery for Social Science Data Management: The DAMES Project Infrastructure

Metadata Creation, Transformation and Discovery for Social Science Data Management: The DAMES Project Infrastructure

Inside the perpetual-motion machine: cross-country comparable evidence on job and worker flows at the industry and firm level

Many studies suggest that idiosyncratic firm-level characteristics shape both job and worker flows in a similar way in all countries. Others argue that cross-country differences in terms of gross job flows are minor. However, these statements are usually based on the comparison of national estimates, typically collected on the basis of different definitions and collection protocols. In contrast, in this article, we use cross-country comparable data on both job and worker flows to examine key determinants of these flows and of their cross-country differences. We find that idiosyncratic firm characteristics (industry, age, and size) play an important role for both gross job and worker flows in all countries. Nevertheless, in contrast with part of the literature, we find that, even controlling for these idiosyncratic factors, cross-country differences concerning both gross job and worker flows appear large and of a similar magnitude. Both job and worker flows in countries such as the USA and the UK exceed those in certain continental European countries by a factor of two. Moreover, the variation of worker flows across different dimensions is well explained by the variation of job flows. Consistently, churning flows, that is flows originating by firms churning workers and employees quitting and being replaced, display much less variation across countries. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Labor market institutions and aggregate fluctuations in a search and matching model

This paper explores the influence of labor market institutions on aggregate fluctuations. It uses a dynamic, stochastic, general equilibrium model characterized by search and matching frictions in the labor market and nominal rigidities in the goods market. It finds that firing costs and unemployment benefits can have substantial effects on aggregate fluctuations. Increasing firing costs decreases the volatility of output, employment, and job flows due to the reduction in the mass of jobs sensitive to disturbances and lower incentives for firms to hire and fire workers. Hence, firms adjust to shocks mainly through prices, causing inflation to become more volatile. Raising unemployment benefits has the reverse effect on aggregate fluctuations.

Labour Flows in Belgium

The paper describes job flows in Belgium using micro data at the firm level collected through the annual social balance sheets that companies have to file with the National Bank of Belgium. The coverage of the study is very broad: all industries and commercial services are included. We contribute to the previous literature by studying a long period from 1998 to 2006, covering both upturns and downturns in the Belgian economy. Furthermore, data from the social balance sheets make it possible to take into account the heterogeneity of the workforce, on top of the eterogeneity of firms themselves: job flows are broken down by socio-professional status and type of employment contract.

National estimates of gross employment and job flows from the Quarterly Workforce Indicators with demographic and industry detail

The Quarterly Workforce Indicators (QWI) are local labor market data produced and released every quarter by the United States Census Bureau. Unlike any other local labor market series produced in the US or the rest of the world, QWI measure employment flows for workers (accession and separations), jobs (creations and destructions) and earnings for demographic subgroups (age and gender), economic industry (NAICS industry groups), detailed geography (block (experimental), county, Core-Based Statistical Area, and Workforce Investment Area), and ownership (private, all) with fully interacted publication tables. The current QWI data cover 47 states, about 98% of the private workforce in those states, and about 92% of all private employment in the entire economy. State participation is sufficiently extensive to permit us to present the first national estimates constructed from these data. We focus on worker, job, and excess (churning) reallocation rates, rather than on levels of the basic variables. This permits a comparison to existing series from the Job Openings and Labor Turnover Survey and the Business Employment Dynamics Series from the Bureau of Labor Statistics (BLS). The national estimates from the QWI are an important enhancement to existing series because they include demographic and industry detail for both worker and job flow data compiled from underlying micro-data that have been integrated at the job and establishment levels by the Longitudinal Employer-Household Dynamics Program at the Census Bureau. The estimates presented herein were compiled exclusively from public-use data series and are available for download.

Job resources and flow at work: Modelling the relationship via latent growth curve and mixture model methodology

The aim of the present three‐wave follow‐up study (n = 335) among employees of an employment agency was to investigate the association between job resources and work‐related flow utilizing both variable‐ and person‐oriented approaches. In addition, emotional exhaustion was studied as a moderator of the job resources–flow relationship, and as a predictor of the development of job resources and flow. The variable‐oriented approach, based on latent growth curve analyses, revealed that the levels of job resources and flow at work, as well as changes in these variables, were positively associated with each other. The person‐oriented inspection with the growth mixture modelling identified four trajectories based on the mean levels of job resources and flow and on the changes of these mean levels over time: (a) moderate work‐related resources (n = 166), (b) declining work‐related resources (n = 87), (c) high work‐related resources (n = 46), and (d) low work‐related resources (n = 36). Exhaustion was found to be an important predictor of job resources and flow, but it did not moderate their mutual association. Specifically, a low level of exhaustion was found to predict high levels of job resources and flow. Overall, these results suggest the importance of a person‐oriented view of motivational processes at work. In addition, in order to fully understand positive motivational processes it seems important to investigate the role of negative well‐being states as well.

Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy

This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows and wages. Counterfactual experiments imply that Colombia's integration with global product markets increased its national income at the expense of higher unemployment, greater wage inequality, and increased firm-level volatility. In contrast, contemporaneous labor market reforms dampened the increase in unemployment and aggregate job turnover. The results speak more generally to the effects of globalization on labor markets. (JEL F13, F16, F66, J31, J63, O15, O19)

Cyclical Employment and Unemployment Flows in the U.S.

Unemployment in the U.S. has risen dramatically since the start of the recession in December 2007, going from about 6.8 million people in May 2007 to over 14.6 million in June 2010. This is often spoken of as 7.8 million jobs, but this is a terribly misleading view of the issue. The reality is that flows of people and jobs each month are huge -- it would be more correct to say that 4-6 million jobs were lost each month, with a comparable (just slightly lower) number found each month. This paper examines some of the data regularities in the monthly gross flows published by the Bureau of Labor Statistics. The methodology is to analyze the transition rates and implied steady-state levels of employment and unemployment. This is an approach that, while not commonly used, does provide valuable insights. For example, declines in employment have been largely due to decreased probability of finding a job, with little net impact from changes in the probability of losing a job. Furthermore, in spite of a fall in the u-to-e transition contributing significantly to falling employment, the flow from unemployment to employment actually increased. As another example, changes in the probability of moving between unemployment and not in the labor force (NLF) look like an anti-discouraged worker effect -- during the recession people are more likely to move from NLF to unemployment and less likely to move from unemployment to NLF.

Job Flows, Demographics and the Great Recession

The recession the United States economy entered in December of 2007 is considered to be the most severe downturn the country has experienced since the Great Depression. The unemployment rate reached as high as 10.1 percent in October 2009 - the highest we have seen since the 1982 recession. In this paper we examine the severity of this recession compared to those in the past by examining worker flows into and out of unemployment taking into account changes in the demographic structure of the population. We identify the most vulnerable groups of this recession by dissagregating the workforce by age, gender and race. We find that adjusting for the aging of the U.S. labor force increases the severity of this recession. Our results indicate that the increase in the unemployment rate is driven to a larger extent by the lack of hiring (low outflows), but flows into unemployment are still important for understanding unemployment rate dynamics (they are not as acyclical as some literature suggests) and differences in unemployment rates across demographic groups. We find that this is indeed a mancession, as men face higher job separation probabilities, lower job finding probabilities and, as a result, higher unemployment rates than women. Lastly, there is some evidence that blacks suffered more than whites (again, this difference is particularly pronounced for men).

Firms' relative sensitivity to aggregate shocks and the dynamics of gross job flows

We propose the coefficient of variation as a measure of the cyclical volatility of gross job flows that is immune to trends in net job creation. In addition, we show that this measure is intrinsically related to the importance of aggregate shocks for fluctuations in job flows at the firm level. Using data for the Portuguese economy, we conclude that the coefficient of variation is a more robust measure for the underlying volatility of gross job flows. We also find that large and old firms exhibit higher relative sensitivity to aggregate shocks than small and young firms, and have a disproportional influence over the dynamics of aggregate job reallocation. In particular, since large and old firms tend to reallocate jobs less procyclically than small and young firms, job reallocation is less procyclical than if all firm classes were equally sensitive to aggregate shocks.

Does Strict Employment Protection Discourage Job Creation? Evidence from Croatia

Employment protection legislation in Croatia is among the most strict in Europe. Firing is difficult and costly, and flexible forms of employment are limited. Is this apparent rigidity reflected-as one would expect based on standard economic theory-in low labor market dynamics? Is job creation low and hiring limited? Is the job security of insiders achieved at the cost of outsiders not being able to enter thelabor market? The author attempts to answer these questions by examining job flows. If the employment protection legislation is binding, then job and worker turnover should be low. He shows that this is indeed the case. Hiring is limited and the average job tenure is very long in Croatia. Job destruction is low, however job creation is still lower. The result is accumulation of unemployment, in large part due to new labor market entrants not being able to find a job. The high degree of job protection also seems to strengthen the bargaining position of insiders and results in relatively high wages. So, wages in Croatia are higher than among its competitors, even after adjusting for productivity. These high labor costs are likely to contribute to limited job creation in existing firms, but also are likely to discourage the entry of-and thus job creation in-new firms. The author presents evidence that firm growth has been indeed limited in Croatia, contributing to the low employment level. The author examines other potential causes of high unemployment in Croatia (the unemployment benefit system, labor taxation, the wage structure, and skill and spatial mismatches). He argues that they do not play a substantial part in accounting for poor labor market outcomes in Croatia. The author concludes that the stringent employment protection legislation is the key labor market institution behind low job creation and high unemployment. Based on this he recommends specific measures aimed at liberalizing the labor market to foster job creation and employment.

Monetary policy and the asymmetric job creation and destruction behaviour

This article explores whether monetary policy can account for the asymmetric job creation and job destruction behaviour in the Taiwanese manufacturing and service sectors during the period 1987 to 2003. This article finds evidence for positive steepness in the job destruction rate in the manufacturing sector and negative steepness in the job creation rate in the service sector. This article also finds that the monetary policy (discount rate) can help to explain the asymmetric job creation and job destruction behaviour. Importantly, this article finds that monetary policy stimulated job flow behaviour to a better regime. This evidence suggests that monetary policy may be an efficient instrument in stimulating the labour market in Taiwan.