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Federal Reserve Bank of Philadelphia
Working Papers
The cyclicality of separation and job finding rates
Shigeru Fujita
Garey Ramey

This paper uses CPS gross flow data, adjusted for margin error and time aggregation error, to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability. Cyclical changes in the separation rate lead those of unemployment, while the job finding rate and unemployment move contemporaneously. Fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment, depending on how the data are detrended. The authors results suggest an important role for the separation rate in explaining the cyclical behavior of unemployment.

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Shigeru Fujita & Garey Ramey, The cyclicality of separation and job finding rates, Federal Reserve Bank of Philadelphia, Working Papers 07-19, 2007.
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Keywords: Job hunting ; Unemployment
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