Working Paper: NBER ID: w26019
Authors: Michael J. Pries; Richard Rogerson
Abstract: Using the Quarterly Workforce Indicators, we document that a significant amount of the decline in labor market turnover during the last two decades is accounted for by the decline in employment spells that last less than a quarter. Using a search and matching model that incorporates noisy signals about the quality of a worker-firm match, we show that improved candidate screening by firms can account for the decline in short-lived employment spells. Quantitative exercises show that this explanation can account for the observed changes in various labor market outcomes, whereas alternative potential explanations, such as increased hiring costs, cannot.
Keywords: labor market turnover; short-duration employment spells; candidate screening; search and matching model
JEL Codes: E24; J23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| improved candidate screening by firms (M51) | decline in short-lived employment spells (J63) |
| decline in short-lived employment spells (J63) | decline in labor market turnover (J63) |
| improved candidate screening by firms (M51) | decline in labor market turnover (J63) |
| improved candidate screening by firms (M51) | higher-quality matches (L15) |
| higher-quality matches (L15) | lower turnover (M51) |