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Journal Article
Labor market anxiety and the downward trend in the job separation rate
Anecdotal evidence suggests that labor market conditions surrounding American workers had been worsening in recent decades, even before the severe recession in 2007-2009. However, studies by academic researchers have not found clear evidence that worker turnover has increased over time. In this article, Shigeru Fujita shows that there is a long-run downward trend in the separation rate into unemployment and examines several factors that help account for this long-run decline. He argues that the aging of the labor force has played an important role in the trend. He also explains, using an ...
Journal Article
All Layoffs Are Not Created Equal
More layoffs are intended to be temporary than conventional measures would suggest. Shigeru Fujita explains how this undercounting occurs and its surprising implications for today's problem of long-term unemployment.
Journal Article
Where Is the Phillips Curve?
A closer look at the Phillips curve helps us understand why our low unemployment rate hasn?t led to a bigger rise in prices or wages
Working Paper
Measuring Employer-to-Employer Reallocation
We revisit the measurement of Employer-to-Employer (EE) transitions in the monthly Current Population Survey. We detect sharp increases in the incidence of missing answers to the relevant question starting in 2007, when the U.S. Census Bureau introduced the Respondent Identification Policy. We show evidence of non response selection by both observable and unobservable worker characteristics that correlate with EE mobility. We propose a selection model and aprocedure to impute missing answers, thus EE transitions. Our imputed EE aggregate series restores a close congruence with the business ...
Working Paper
DECLINING TRENDS IN THE REAL INTEREST RATE AND INFLATION: THE ROLE OF AGING
This paper explores a causal link between aging of the labor force and declining trends in the real interest rate and inflation in Japan. We develop a New Keynesian search/matching model that features heterogeneities in age and firm-specific skills. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure induce significant low-frequency movements in per-capita consumption growth and the real interest rate. They also lead to similar movements in the inflation rate when the monetary policy ...
Working Paper
Declining labor turnover and turbulence
Superseded by Working Paper 15-29 The purpose of this paper is to identify possible sources of the secular decline in the aggregate job separation rate over the last three decades. The author first shows that aging of the labor force alone cannot account for the entire decline. To explore other sources, he uses a simple labor matching model with two types of workers, experienced and inexperienced, where the former type faces a risk of skill obsolescence during unemployment. When the skill depreciation occurs, the worker is required to restart his career and thus suffers a drop in earnings. ...
Journal Article
Where Is Everybody? The Shrinking Labor Force Participation Rate
More Americans are neither working nor looking for work. What is going on?
Working Paper
Worker flows and job flows: a quantitative investigation
This paper studies quantitative properties of a multiple-worker firm search/matching model and investigates how worker transition rates and job flow rates are interrelated. We show that allowing for job-to-job transitions in the model is essential to simultaneously account for the cyclical features of worker transition rates and job flow rates. Important to this result are the distinctions between the job creation rate and the hiring rate and between the job destruction rate and the layoff rate. In the model without job-to-job transitions, these distinctions essentially disappear, thus making ...
Working Paper
The cyclicality of separation and job finding rates
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 ...
Journal Article
A closer look at the German labor market 'miracle'
Compared with the steep, persistent increase in unemployment that the Great Recession triggered in the United States, its effect on unemployment in Germany was surprisingly mild. While U.S. unemployment soared from 4.8 percent to 9.5 percent between the fourth quarter of 2007 and the fourth quarter of 2010, the German unemployment rate actually fell from 7.6 percent to 6.4 percent over the same period (Figure 1).1 The marked contrast may make one wonder whether the magnitude of the recession itself was smaller in Germany. Actually, the severity of the recession as measured by the drop in ...