Home About Latest Browse RSS Advanced Search

Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
Understanding Declining Fluidity in the U.S. Labor Market
Raven S. Molloy
Christopher L. Smith
Riccardo Trezzi
Abigail Wozniak
Abstract

We document a clear downward trend in labor market fluidity that is common across a variety of measures of worker and job turnover. This trend dates to at least the early 1980s if not somewhat earlier. Next we pull together evidence on a variety of hypotheses that might explain this downward trend. It is only partly related to population demographics and is not due to the secular shift in industrial composition. Moreover, the decline in labor market fluidity seems unlikely to have been caused by an improvement in worker-firm matching, the formalization of hiring practices, or an increase in land use regulation or other regulations. Plausible avenues for further exploration include changes in the worker-firm relationship, particularly with regard to compensation adjustment; changes in firm characteristics such as firm size and age; and a decline in social trust, which may have increased the cost of job search or made both parties in the hiring process more risk averse.


Download Full text
Download http://dx.doi.org/10.17016/FEDS.2016.015
Cite this item
Raven S. Molloy & Christopher L. Smith & Riccardo Trezzi & Abigail Wozniak, Understanding Declining Fluidity in the U.S. Labor Market, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2016-15, 02 Mar 2016.
More from this series
JEL Classification:
Subject headings:
Keywords: demographic trends; hires and separations; job creation and destruction; job turnover; labor market churn; labor market transitions; labor reallocation
DOI: 10.17016/FEDS.2016.015
For corrections, contact Ryan Wolfslayer ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal