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Job-to-Job Transitions, Labor Force Participation, and the Output Gap

Paper Session

Sunday, Jan. 6, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, M302
Hosted By: American Economic Association
  • Chair: Emi Nakamura, University of California-Berkeley

The Cyclicality of Hiring and Separations: Evidence from Canada

Alice Nakamura
,
University of Alberta
Emi Nakamura
,
University of California-Berkeley
Kyle Phong
,
University of Alberta
Jón Steinsson
,
University of California-Berkeley

Abstract

This paper studies the cyclical variability of job finding, separations, and employer-to-employer flows in Canada for 1978-2016, the longest such time series available. Our analysis is based on direct administrative records of job separations. Our measures provide a much cleaner record of gross worker flows than standard household surveys. They are not subject to time-aggregation bias or to the measurement error problems that plague standard household surveys on employment dynamics. Employer-to-employer flows are strongly procyclical and are the dominant component of both job finding and separation. We document several additional facts regarding the role of job-to-job flows in labor market fluidity, the near-constancy of the ratio of hires coming from employment versus unemployment, and the roles of "ins" vs "outs" in the Canadian labor market.

Flow Origins of Labor Force Participation Fluctuations

Michael Elsby
,
University of Edinburgh
Bart Hobijn
,
Arizona State University
Fatih Karahan
,
Federal Reserve Bank of New York
Gizem Kosar
,
Federal Reserve Bank of New York
Aysegul Sahin
,
Federal Reserve Bank of New York

Abstract

We investigate the flow origins of business cycle and trend movements in the labor force participation rate. A three-state decomposition based on monthly labor market flows reveals a new stylized fact: increased attachment to the labor force, rather than increased labor force entry, accounts for majority of business cycle and trend movements in the participation rate. A prominent example is the considerable rise in the female participation rate, which can be attributed to a gradual rise in the persistence of participation for women. We also show that recent improvements in the labor force participation rate can be traced to a rise in the persistence of participation rather than increased entry to the labor force.

Is Inflation Just Around the Corner? The Phillips Curve and Global Inflationary Pressures

Olivier Coibion
,
University of Texas-Austin
Yuriy Gorodnichenko
,
University of California-Berkeley
Mauricio Ulate
,
University of California-Berkeley

Abstract

Since the end of the Great Recession and the Global Financial Crisis, inflation has been stubbornly low in advanced economies. Even with record low unemployment rates in the U.S. and other countries, inflation does not appear to be rising. We provide new evidence on the strength of the Phillips curve relationship, using survey measures of firm and household inflation expectations for a range of countries. We find a robust negative relationship between unemployment gaps and inflation, once one conditions on inflation expectations. Current deviations of inflation from inflation expectations suggest that there remains significant economic slack, both in the U.S. and in many other advanced economies.
Discussant(s)
Kyle Herkenhoff
,
University of Minnesota
Nicolas Petrosky-Nadeau
,
Federal Reserve Bank of San Francisco
Kirstin Hubrich
,
Federal Reserve Board
JEL Classifications
  • E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy
  • E3 - Prices, Business Fluctuations, and Cycles