FRB: The Cyclicality of Job-to-Job Transitions and Its Implications for Aggregate Productivity

International Finance Discussion Papers

The Cyclicality of Job-to-Job Transitions and Its Implications for Aggregate Productivity
Toshihiko Mukoyama
2013-1074 (February 2013)

Abstract: This paper analyzes the job-to-job transitions of workers in the United States. I propose a new method of correcting the time-aggregation bias. The bias-corrected series from 1996 to 2011 reveals a procyclical pattern of job-to-job transition and a large decline since the beginning of the 2000s. I construct a model of on-the-job search and explore the implications of this phenomenon. The calibrated model shows that the decline in the reallocation of workers through job-to-job transitions has had a substantial effect on total factor productivity (TFP). From 2009 to 2011, the model accounts for about 0.5%-0.7% annual decline in TFP.

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Keywords
Job-to-job transition, time-aggregation bias, on-the-job search

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