Discussion paper

DP16733 Equilibrium Job Turnover and the Business Cycle

This paper develops and estimates a fully microfounded equilibrium business cycle model
of the US labor market with aggregate productivity shocks. Those microfoundations are consistent
with evidence regarding the underlying distribution of firm growth rates across firms
[by age and size] and, when aggregated, are consistent with macro-evidence regarding gross
job creation and job destruction flows over the cycle. By additionally incorporating on-the-job
search, we systematically characterise the stochastic relationships between aggregate job creation
and job destruction flows across firms, gross hire and quit flows [churning] by workers
across firms, as well as the persistence and volatility of unemployment and worker job finding
rates over the cycle.

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Citation

Carrillo-Tudela, C, A Clymo and M Coles (2021), ‘DP16733 Equilibrium Job Turnover and the Business Cycle‘, CEPR Discussion Paper No. 16733. CEPR Press, Paris & London. https://cepr.org/publications/dp16733