American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains
American Economic Review: Insights
vol. 2,
no. 1, March 2020
(pp. 101–24)
Abstract
In the canonical DMP model of job openings, all job openings stem from new job creation. Jobs denote worker-firm matches, which are destroyed following worker quits. Yet, employers classify 56 percent of vacancies as quit-driven replacement hiring into old jobs, which evidently outlived their previous matches. Accordingly, aggregate and firm-level hiring tightly track quits. We augment the DMP model with longer-lived jobs arising from sunk job creation costs and replacement hiring. Quits trigger vacancies, which beget vacancies through replacement hiring. This vacancy chain can raise total job openings and net employment. The procyclicality of quits can thereby amplify business cycles.Citation
Mercan, Yusuf, and Benjamin Schoefer. 2020. "Jobs and Matches: Quits, Replacement Hiring, and Vacancy Chains." American Economic Review: Insights, 2 (1): 101–24. DOI: 10.1257/aeri.20190023Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E32 Business Fluctuations; Cycles
- J23 Labor Demand
- J31 Wage Level and Structure; Wage Differentials
- J63 Labor Turnover; Vacancies; Layoffs