Arnold Kling  

Labor Market Dynamics

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In the latest Journal of Economic Perspectives, Steven J. Davis, R. Jason Faberman, and John Haltiwanger write,


More than ten percent of U.S. workers separate from their employers each quarter. Some move directly to a new job with a different employer, some become unemployed, and some exit the labor force. The flow of new hires is similarly large, and somewhat larger whenever aggregate employment expands. The magnitude of hires and separations underscores the fluid character of U.S. labor markets and draws attention to questions of search and matching, recruiting, applicant screening, and employee retention. It also provides powerful motivation for theories of frictional unemployment.

My take from their work is that at a micro level the labor market is extremely turbulent. Relatively speaking, aggregate data on employment and unemployment are remarkably stable. I think that the data on "gross flows" in the labor market is extremely important. Robert Hall of Stanford pays a lot of attention to it, and if he comes up with enough interesting results it could lead to a Nobel Prize. Speaking of which, I have not seen much speculation yet this year. Baumol? Romer and Krugman?

Update: Tim Taylor sends a link to Nobel speculations.


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CATEGORIES: Labor Market



COMMENTS (3 to date)
Barkley Rosser writes:

I doubt Krugman will get it at this time, at least by himself. Baumol is a possibility, and Romer will certainly get it eventually, although this may not be the year.

Here are three combos likely to get it within the next five years, although I would not want to wager on any particular one for this year specifically.

International trade has not gotten it for a long time. Bhagwati and Dixit look like the top ones for that, although Krugman could get added on to that one, sort of the way Stiglitz got tagged onto the last one for asymmetric information. There are some other folks who could be in on that one, although I would say Bhagwati as the lead.

Fama and somebody, maybe nobody, for financial economics, even as the efficient markets hypothesis looks shakier and shakier.

Gordon Tullock and Anne Krueger for rent seeking.

William Johnson writes:

I do not believe that the labor market is all that turbulant. When you note all the employees leaving companies you do not get an accurate picture of why? I believe that more and more baby boomers are reaching retirement age everyday and that is creating a huge group of people leaving the labor force. Also young employees tend to always be looking for the next best thing. The fact that more people are being hired than are leaving is disturbing all on its own. Does it take more people to replace the ones leaving or can it just be that more work has actually been created. I do agree however that retention is important due to the high training cost of new employess. But new recruiting strategies can not remedy people leaving you need to create a work place that is more satisfying to the workers.

cure writes:

Fama has certainly been important enough to win it; I'd daresay he'd be the top cited economists never to win if he dropped dead tomorrow. Dixit is certainly a good choice, as is Baumol. You've go to imagine we'll see some winners from growth theory in the near future as well.

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