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Labor Reallocation, Employment, and Earnings: Vector Autoregression Evidence
Author(s) -
Hyatt Henry R.,
McElroy Tucker S.
Publication year - 2019
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/labr.12153
Subject(s) - earnings , vector autoregression , economics , unemployment , percentage point , unemployment rate , labour economics , structural vector autoregression , point (geometry) , autoregressive model , econometrics , monetary economics , macroeconomics , finance , mathematics , monetary policy , geometry
Abstract We present time series evidence for the USA 1993–2013 on the relationship between labor reallocation, employment, and earnings using a vector autoregression framework. We find that an increase in labor market churn by 1 percentage point predicts that employment will increase by 100,000–560,000 jobs, lowering the unemployment rate by 0.05–0.25 percentage points. Job destruction does not predict changes in employment but a 1 percentage point increase in job destruction leads to an increase in unemployment 0.14–0.42 percentage points. We find mixed results on the relationship between labor reallocation rates and earnings.