American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Hiring, Churn, and the Business Cycle
American Economic Review
vol. 102,
no. 3, May 2012
(pp. 575–79)
Abstract
Hires occur for two reasons - to grow a business and to replace those who have left (churn). Churn is an important part of employment dynamics, allowing workers to move to their most productive use. We present evidence on churn from the Job Openings and Labor Turnover Survey (JOLTS). Churn is procyclical. During the 2007-09 recession, four-fifths of hiring reductions are associated with reduced churn, not with reductions in job creation. We estimate that the cost of reduced churn is about two-fifths of a percentage point of GDP annually throughout the three-and-one-half year period since the beginning of the recession.Citation
Lazear, Edward P., and James R. Spletzer. 2012. "Hiring, Churn, and the Business Cycle." American Economic Review, 102 (3): 575–79. DOI: 10.1257/aer.102.3.575JEL Classification
- E32 Business Fluctuations; Cycles
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
- J23 Labor Demand