Labor market flows in the cross section and over time

Many theoretical models of labor market search imply a tight link between worker flows (hires and separations) and job gains and losses at the employer level. We use rich establishment-level data to assess several theoretical models and to study the relationship between worker flows and jobs flows. Hires, quits, and layoffs exhibit strong, highly nonlinear relationships to employer growth rates in the cross section. Simple statistical models of these relationships greatly improve our ability to account for fluctuations in aggregate worker flows and enable us to construct synthetic measures of hires, separations, quits, and layoffs back to 1990.

► Tight link between layoffs and job destruction in the cross section. ► Highly pro-cyclic quit rates, more so at contracting employers. ► “Hockey-stick” relationship of hires to employer growth rates. ► Evidence supports hybrid view encompassing several theories. ► Synthetic JOLTS-like measures of layoffs, quits, and hires back to 1990.