Separations, Sorting and Cyclical Unemployment

By Andreas I. Mueller. Social Science Research Network, 2017

130 citations recorded by the source corpus.

This paper establishes a new fact about the compositional changes in the pool of unemployed over the U.S. business cycle and evaluates a number of theories that can potentially explain it. Using micro-data from the Current Population Survey for the years 1962-2011, it documents that in recessions the pool of unemployed shifts towards workers with high wages in their previous job. Moreover, it shows that these changes in the composition of the unemployed are mainly due to the higher cyclicality of separations for high-wage workers, and not driven by differences in the cyclicality of job-finding rates. A search-matching model with endogenous separations and worker heterogeneity in terms of ability has difficulty in explaining these patterns, but an extension of the model with credit-constraint shocks does much better in accounting for the new facts.

Subfields: Economics and Econometrics, General Health Professions

View Paper: https://www.semanticscholar.org/paper/50226e2bcdc8357e352a4e6b0f91dd9a13dc2a83

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Citations in the corpus

Decomposing the Ins and Outs of Cyclical Unemployment (2012, unknown): “…outflows and an increase in the share of highly educated individuals in the pool of the unemployed in a recession, which confirms the results of Mueller (2012), who argues that there are more workers with a high wage in their previous job – and especially workers with high skills – in the pool…”
On the importance of the participation margin for labor market fluctuations (2013, background): “Recent research by Mueller (2012) also focuses on compositional changes in unemployment over the cycle, but highlights instead shifts in the prior wages of unemployed workers.”
Upskilling: Do Employers Demand Greater Skill When Workers Are Plentiful? (2015, background): “This intuition is consistent with the fact that the number of available high-skilled job seekers per vacancy is strongly correlated with the overall unemployment rate, as the composition of the pool of unemployed workers becomes more skilled during recessions (Mueller, 2017).”
Job Search Behavior Among the Employed and Non-Employed (2017, unknown): “…with the observations that job-finding rates differ little by skill group (Mincer, 1991; Elsby, Hobijn and Şahin, 2010) or by prior wages (Mueller, 2017) and also consistent with our evidence in Supplementary Appendix S-B, which shows that controlling for observable characteristics does…”