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Worker flows and job flows: a quantitative investigation.

This paper studies quantitative properties of a multiple-worker firm search/matching model and investigates how worker transition rates and job flow rates are interrelated. The authors show that allowing for job-to-job transitions in the model is essential to simultaneously account for the cyclical features of worker transition rates and job flow rates. Important to this result are the distinctions between the job creation rate and the hiring rate and between the job destruction rate and the layoff rate. In the model without job-to-job transitions, these distinctions essentially disappear, thus making it impossible to simultaneously replicate the cyclical features of both labor market flows.

Working Paper 16-03. Supersedes Working Paper 13-9/R. Shigeru Fujita, Federal Reserve Bank of Philadelphia; Makoto Nakajima, Federal Reserve Bank of Philadelphia.

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Title Annotation:RESEARCH UPDATE
Publication:Economic Insights
Date:Mar 22, 2016
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