Finance and Economics Discussion Series (FEDS)
March 2002
Is Reallocation Related to the Cycle? A Look at Permanent and Temporary Job Flows
Abstract:
How much of aggregate employment fluctuations is due to plants destroying and then recreating the same jobs over the cycle and how much is due to some plants permanently destroying jobs in a recession and other plants permanently creating jobs in an expansion? This paper decomposes plant level job flows into permanent and temporary components to answer this question, and finds that the permanent reallocation of jobs across plants accounts for approximately 30 percent of the cyclical fluctuations in aggregate employment.
Keywords: Job flows, reallocation, employment fluctuations
PDF: Full Paper
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