Leadership Investigate

Labor Market Flows In The Cross Section And Over Time

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Executive Summary

Many theoretical models of labor market search imply a tight link between worker flows (hires and separations) and job gains and losses at the employer level. Partly motivated by these theories, the authors exploit establishment-level data from U.S. sources to study the relationship between worker flows and job flows in the cross section and over time. They document strong, highly nonlinear relationships of hiring, quit and layoff rates to employer growth in the cross section. Simple statistical models that capture these cross-sectional relationships greatly improve their ability to account for fluctuations in aggregate worker flows.

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