DP12343 Worker Churn and Employment Growth at the Establishment Level

Author(s): Rüdiger Bachmann, Christian Bayer, Christian Merkl, Stefan Seth, Heiko Stüber, Felix Wellschmied
Publication Date: September 2017
Keyword(s): aggregate fluctations, churn, job flows, job-to-job transitions, worker flows
JEL(s): E20, E24, E32, J23, J63
Programme Areas: Monetary Economics and Fluctuations
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12343

We study the relationship between employment growth and worker flows in excess of job flows (churn) at the establishment level using the new German AWFP dataset spanning from 1975-2014. Churn is above 5 percent of employment along the entire employment growth distribution and most pronounced at rapidly-adjusting establishments. We find that the patterns of churn along the employment growth distribution can be explained by separation rate shocks and time-to-hire frictions. These shocks become larger on average during boom periods leading to procyclical worker churn. Distinguishing between separations into non-employment and to other establishments, we find that separations to other establishments drive all procyclical churn. In a secondary contribution, we compare German worker and job flows with their US counterparts and recent US findings.