The Cyclical Job Ladder

The Cyclical Job Ladder
Author: Giuseppe Moscarini
Publisher:
Total Pages: 0
Release: 2018
Genre:
ISBN:
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Many theories of labor market turnover generate a job ladder. Due to search frictions, workers earn rents from employment. All workers agree on which jobs are, in this sense, more desirable and slowly climb the job ladder through job-to-job quits. Occasionally, negative shocks throw them off the ladder and back into unemployment. We review a recent body of theory and empirical evidence on labor market turnover through the lens of the job ladder. We focus on the critical role that the job ladder plays in transmitting aggregate shocks, through the pace and direction of employment reallocation, to economic activity and wages and in shaping business cycles more generally. The main evidence concerns worker transitions, both through nonemployment and from job to job, between firms of different sizes, ages, productivity levels, and wage premiums, as well as the resulting earnings growth. Poaching by firms up the ladder is the main engine of reallocation, which shuts down in recessions.

Cyclical Job Ladders by Firm Size and Firm Wage

Cyclical Job Ladders by Firm Size and Firm Wage
Author: John C. Haltiwanger
Publisher:
Total Pages: 59
Release: 2017
Genre: Big business
ISBN:
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We study whether workers progress up firm wage and size job ladders, and the cyclicality of this movement. Search theory predicts that workers should flow towards larger, higher paying firms. However, we see little evidence of a firm size ladder, partly because small, young firms poach workers from all other businesses. In contrast, we find strong evidence of a firm wage ladder that is highly procyclical. During the Great Recession, this firm wage ladder collapsed, with net worker reallocation to higher wage firms falling to zero. The earnings consequences from this lack of upward progression are sizable.

The Job Ladder

The Job Ladder
Author: Giuseppe Moscarini
Publisher:
Total Pages: 0
Release: 2023
Genre:
ISBN:
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We introduce on-the-job search frictions in an otherwise standard monetary DSGE New-Keynesian model. Heterogeneity in productivity across jobs gives rise to a job ladder. Firms Bertrand-compete for employed workers according to the Sequential Auctions protocol of Postel-Vinay and Robin (2002). Outside job offers to employed workers, when accepted, reallocate employment up the productivity ladder; when declined, because matched by the current employer, they raise production costs and, due to nominal price rigidities, compress mark-ups, building inflationary pressure. When employment is concentrated at the bottom of the job ladder, typically after recessions, the reallocation effect prevails, aggregate supply expands, moderating marginal costs and inflation. As workers climb the job ladder, reducing slack in the employment pool, the inflation effect takes over. The model generates endogenous cyclical movements in the Neo Classical labor wedge and in the New Keynesian wage mark-up. The economy takes time to absorb cyclical misallocation and features propagation in the response of job creation, unemployment and inflation to aggregate shocks. The ratio between job-finding probabilities from job-to-job and from unemployment, a measure of the "Acceptance rate" of job offers to employed workers, predicts negatively inflation, independently of the unemployment rate.

The Job Ladder

The Job Ladder
Author: Gary S. Fields
Publisher: Oxford University Press
Total Pages: 423
Release: 2023-03-09
Genre: Social Science
ISBN: 0192692909
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This is an open access title available under the terms of a CC BY-NC-SA 3.0 IGO licence. It is free to read at Oxford Scholarship Online and offered as a free PDF download from OUP and selected open access locations. Based on studies of a range of countries in the Global South, this book examines heterogeneity within informal work by applying a common conceptual framework and empirical methodology. The country studies use panel data to study the dynamics of worker transitions between formal and heterogeneous informal work and present a comparative perspective across developing countries in Asia, Latin America, Sub-Saharan Africa, and North Africa and the Middle East. Each study provides a nuanced view of informality, dividing workers into six work statuses: formal wage-employees, upper-tier informal wage-employees, lower-tier informal wage employees, formal self-employed, and upper-tier informal self-employed. Based on this common conceptual framework, the country studies examine the distribution of workers across each of these work statuses, and document transition patterns across different formality and work statuses. The panel data analysed in each country study provide a basis for making statements about labour market transitions that are not warranted when using comparable cross-sections. The studies also examine the individual- and household-level characteristics associated with workers in each work status. Using these characteristics, each study constructs a 'job ladder' that ranks each work status, and then examines the characteristics of workers that are associated with transitions up (and down) the job ladder.

Financial Disruptions and the Cyclical Upgrading of Labor

Financial Disruptions and the Cyclical Upgrading of Labor
Author: Brendan Epstein
Publisher: International Monetary Fund
Total Pages: 45
Release: 2017-06-15
Genre: Business & Economics
ISBN: 1484303954
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Amid total factor productivity (TFP) shocks job-to-job flows amplify the volatility of unemployment, but the aggregate implications of job-to-job flows amid financial shocks are less understood. To develop such understanding we model a general equilibrium labor-search framework that incorporates on-the-job (OTJ) search and distinctly accounts for the differential impact of TFP and financial shocks. Surprisingly, we find that the interaction of OTJ search with financial shocks is sufficiently different from its interaction with TFP shocks so that, under standard calibrations, our model generates aggregate dynamics exceedingly in line with the behavior of key U.S. macro data across several decades and in the wake of the Global Financial Crisis as well. Importantly, as in the data, the model yields relatively high volatilities of consumption, labor income, and unemployment. As such, our work contributes to resolving two limitations of current general equilibrium labor-search theory: under standard calibrations models without OTJ search generate implausibly low unemployment volatility, while models with OTJ search generate unemployment volatility closer to the data but at the expense of implausibly low consumption and labor-income volatility.

Job Ladder and Business Cycles

Job Ladder and Business Cycles
Author: Felipe Alves
Publisher:
Total Pages: 44
Release: 2022
Genre: Business cycles
ISBN:
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"I build a Heterogeneous Agents New Keynesian model with rich labor market dynamics. Workers search both off- and on-the-job, giving rise to a job ladder, where employed workers slowly move toward more productive and better paying jobs through job-to-job transitions, while negative shocks occasionally throw them back into unemployment. The state of the economy includes the distribution of workers over wealth, labor earnings and match productivities. In the wake of an adverse financial shock calibrated to mimic the US Great Recession unemployment dynamics, firms reduce hiring, causing the job ladder to all but "stop working." This leaves wages stagnant for several years, triggering a sharp contraction and slow recovery in consumption and output. On the supply side, the slow pace in worker turnover leaves workers stuck at the bottom of the ladder, effectively cutting labor productivity growth in the aggregate. The interaction between weak demand and low productivity leads to inflation dynamics that resemble the missing disinflation of that period"--Abstract, page ii.

A Job Ladder Model of Firm, Worker, and Earnings Dynamics

A Job Ladder Model of Firm, Worker, and Earnings Dynamics
Author: Sean McCrary
Publisher:
Total Pages: 0
Release: 2022
Genre:
ISBN:
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This paper proposes a multiworker firm model with on-the-job search and decreasing returns-to-scale production. A coalition bargaining solution between a firm and its incumbent workers yields tractability, results in privately efficient recruiting decisions, and delivers an explicit expression for the wage function. The paper shows how a stylized calibrated version of the model can replicate untargeted empirical facts on the cross-sectional dispersion in firm growth and on measured elasticities of separation rates, quitting rates and vacancy duration with respect to wages. It can also replicate observed net poaching rates by firm size and firm wage, therefore rationalizing the absence of firm size ladders and the presence of wage ladders. In terms of business cycles, the model can replicate the cyclical properties of job flows and worker flows.

Who Moves Up the Job Ladder?

Who Moves Up the Job Ladder?
Author: John C. Haltiwanger
Publisher:
Total Pages: 0
Release: 2017
Genre:
ISBN:
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In this paper, we use linked employer-employee data to study the reallocation of heterogeneous workers between heterogeneous firms. We build on recent evidence of a cyclical job ladder that reallocates workers from low productivity to high productivity firms through job-to-job moves. In this paper we turn to the question of who moves up this job ladder, and the implications for worker sorting across firms. Not surprisingly, we find that job-to-job moves reallocate younger workers disproportionately from less productive to more productive firms. More surprisingly, especially in the context of the recent literature on assortative matching with on-the-job search, we find that job-to-job moves disproportionately reallocate less-educated workers up the job ladder. This finding holds even though we find that more educated workers are more likely to work with more productive firms. We find that while more educated workers are less likely to match to low productivity firms, they are even less likely to separate from them, with less educated workers both more likely to separate to a better employer in expansions and to be shaken off the ladder (separate to nonemployment) in contractions. Our findings underscore the cyclical role job-to-job moves play in matching workers to higher productivity and better paying employers.

History Dependence in Wages and Cyclical Selection

History Dependence in Wages and Cyclical Selection
Author: Anja Bauer
Publisher:
Total Pages:
Release: 2019
Genre:
ISBN:
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Using administrative employer-employee data from Germany, we investigate the relationship between wages and past and present labor market conditions. Furthermore, we revisit recent findings of greater wage cyclicality of new hires. Overall, we find strong evidence for history dependent wages, manifested in both hiring and retention premiums - which is consistent with a variety of contract models. Taking into account composition effects as well as cyclical variation in unobserved match quality, we find that wages of new hires from unemployment are no more cyclical, but those of job changers are more cyclical than those of existing workers. We argue that much of the excess wage cyclicality of new hires discussed by the literature can be explained by cyclical job ladder movements in match quality of new hires from employment. In a novel empirical approach, where we further take into account occupational selection, we show that if job ladder movements accompany a simultaneous change of employers and occupations, the resulting wages are particularly cyclical sensitive.

Measuring Distribution and Mobility of Income and Wealth

Measuring Distribution and Mobility of Income and Wealth
Author: Raj Chetty
Publisher: University of Chicago Press
Total Pages: 736
Release: 2022-11-16
Genre: Business & Economics
ISBN: 0226816036
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"Economic research on the efficient allocation of resources has a long history. Increasingly, attention has turned to inequality in the distribution of personal resources and outcomes, and whether individuals or children are locked in their respective places in this distribution or whether mobility is possible. Research focuses not only on measuring inequality and mobility, but on understanding its historical, economic, and social determinants, and how policies might affect these distributions. This volume explores the latest developments in our understanding of income and wealth distribution and mobility. The first section addresses observed patterns of income inequality and shifts in compensation and fluidity that drive or reinforce income inequality. The next focuses on wealth inequality, including the difficulties of defining and measuring wealth. The third section presents new evidence on the intergenerational transmission of inequality and the mechanisms that sustain these patterns. A fourth set of chapters studies the mitigation of inequality, including variations in intervention strategies across time and geography. Finally, issues related to using national accounting data in comparison with survey and microdata are examined. Lack of data, particularly wealth data at the individual or household level in most countries, presents a challenge. Momentum has been building to link multiple sources of survey, administrative and other data in order to mitigate measurement problems in single sources and to provide more comprehensive data on income and wealth"--