A Note on US Worker Turnover
| Date | 01 April 2017 |
| Published date | 01 April 2017 |
| DOI | http://doi.org/10.1111/obes.12154 |
276
©2017 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
A Note on US Worker Turnover*
Sekyu Choi† and Javier Fern ´
andez-Blanco‡
†School of Economics, Finance and Management, Priory Road Complex, Priory Road,
Bristol BS8 1TU, UK (e-mail: sekyu.choi@bristol.ac.uk)
‡Edifici B, Campus UAB 08193, Cerdanyola del Vall´es, Barcelona, Spain
(e-mail: javier.fernandez@uab.cat)
Abstract
The length of new employment relationships is of first-order importance for a number of
questions in recent macro-labour research. We investigate it using data from the Survey
of Income and Program Participation for the US from 1996 onwards, and document that
above two-fifths of newly employed workers fall into non-employment within a year. We
also find that the transition rate from employment to non-employment within the first year
varies significantly for different groups of the population, increases with the duration of
the previous non-employment spell, exhibitsan acyclical or weakly procyclical pattern and
a much higher volatility than the unemployment rate.
I. Introduction
Most models of the labour market assume that exit rates from employment are constant in
job tenure and equal across all workers.1Although this assumption may be a roughlygood
approximation once some threshold in tenure has been crossed, it maynot be appropriate for
a number of questions in the macroeconomic research for which the surviving probability
of new matches is central. For example, on the positive side, Pries (2004) presents a theory
that reconciles the strong persistence of the unemployment rate with the high exit rates
from unemployment by modelling jobs as experience goods and laid-offworkers engaging
in a series of short employment spells. Pries and Rogerson (2005) study to what extent
the large differences in worker turnover between the US and European countries can be
accounted for by policy differences, and be reconciled with similar job turnover rates. On
the normative side, Choi and Fern´andez-Blanco (2015) show that the optimal design of the
unemployment insurance and, more generally, the government intervention is affected by
how sizable both present and future unemployment risks are.This note aims to shed light
on the exit rates from employment of newly employed workers in the US.
JEL Classification numbers: J31, J60, J63
*We are grateful to the participants at the numerous seminars and conferences for their comments since the
beginning of this project. Sekyu gratefully acknowledges financial support from the Spanish Ministry of Economy
and Competitiveness through grant ECO2012-32392 and through the Severo Ochoa Programme for Centres of
Excellence in R&D (SEV-2011-0075),and Javier from the Spanish Ministry of Science and Technologyunder Grant
No. ECO 2013-46395-P.
1See Rogerson and Shimer (2011).
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 79, 2 (2017) 0305–9049
doi: 10.1111/obes.12154
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