Working Paper: NBER ID: w17910
Authors: Edward P. Lazear; James R. Spletzer
Abstract: Churn, defined as replacing departing workers with new ones as workers move to more productive uses, is an important feature of labor dynamics. The majority of hiring and separation reflects churn rather than hiring for expansion or separation for contraction. Using the JOLTS data, we show that churn decreased significantly during the most recent recession with almost four-fifths of the decline in hiring reflecting decreases in churn. Reductions in churn have costs because they reflect a reduction in labor movement to higher valued uses. We estimate the cost of reduced churn to be $208 billion. On an annual basis, this amounts to about .4% of GDP for a period of 3 1/2 years.
Keywords: No keywords provided
JEL Codes: J21; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Economic downturn (recession) (E32) | Churn (hiring and separations that offset each other) (J63) |
| Separations (job losses) (J63) | Churn (hiring and separations that offset each other) (J63) |
| Churn (hiring and separations that offset each other) (J63) | Labor mobility (J62) |
| Churn (hiring and separations that offset each other) (J63) | GDP (E20) |
| Economic downturn (recession) (E32) | Labor mobility (J62) |
| Economic downturn (recession) (E32) | GDP (E20) |