Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence. (21st April 2019)

• Record Type: Journal Article
• Authors: Hyatt, Henry R.; McElroy, Tucker S.
• Is Part Of: Labour. Volume 33:Number 4(2019)
• Page Start: 463
• Page End: 487
• Publication Date: 2019-04-21
• Subjects: Labor economics -- Periodicals; Labor economics -- Europe -- Periodicals; Industrial relations -- Periodicals; Industrial relations -- Europe -- Periodicals; Labor market -- Periodicals; Labor market -- Europe -- Periodicals; 331
• DOI: 10.1111/labr.12153
• Languages: English
• ISSNs: 1121-7081

Abstract

Abstract: We present time series evidence for the USA 1993–2013 on the relationship between labor reallocation, employment, and earnings using a vector autoregression framework. We find that an increase in labor market churn by 1 percentage point predicts that employment will increase by 100, 000–560, 000 jobs, lowering the unemployment rate by 0.05–0.25 percentage points. Job destruction does not predict changes in employment but a 1 percentage point increase in job destruction leads to an increase in unemployment 0.14–0.42 percentage points. We find mixed results on the relationship between labor reallocation rates and earnings.