Labor Market Dynamics
By Arnold Kling
In the latest Journal of Economic Perspectives, Steven J. Davis, R. Jason Faberman, and John Haltiwanger write,
More than ten percent of U.S. workers separate from their employers each quarter. Some move directly to a new job with a different employer, some become unemployed, and some exit the labor force. The flow of new hires is similarly large, and somewhat larger whenever aggregate employment expands. The magnitude of hires and separations underscores the fluid character of U.S. labor markets and draws attention to questions of search and matching, recruiting, applicant screening, and employee retention. It also provides powerful motivation for theories of frictional unemployment.
My take from their work is that at a micro level the labor market is extremely turbulent. Relatively speaking, aggregate data on employment and unemployment are remarkably stable. I think that the data on “gross flows” in the labor market is extremely important. Robert Hall of Stanford pays a lot of attention to it, and if he comes up with enough interesting results it could lead to a Nobel Prize. Speaking of which, I have not seen much speculation yet this year. Baumol? Romer and Krugman?
Update: Tim Taylor sends a link to Nobel speculations.