The cyclicality of job-to-job transitions and its implications for aggregate productivity

This paper analyzes the job-to-job transitions of workers in the United States. First, I propose a new method of correcting the time-aggregation bias. The bias correction does not significantly alter the cyclical properties of the job-to-job transition rates. The bias-corrected series from 1996 to 2011 reveals a procyclical pattern of job-to-job transitions and a large decline since the beginning of the 2000s. Second, I construct a model of on-the-job search and explore the implications of this phenomenon. The calibrated model quantifies the effect of the decline in the reallocation of workers through job-to-job transitions on total factor productivity (TFP). From 2009 to 2011, the model accounts for about 0.4-0.5% annual decline in TFP.