Employment duration and match quality over the business cycle

• Main Authors: BAYDUR, Ismail, MUKOYAMA, Toshihiko
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: Business cycles; employment; quits; firing; match quality; job duration; Labor Economics; Labor Relations
• Online Access: https://ink.library.smu.edu.sg/soe_research/2034; https://ink.library.smu.edu.sg/context/soe_research/article/3033/viewcontent/mukoyama_05_29_2015.pdf
• Institution: Singapore Management University

This paper studies the cyclical behavior of employment duration using data from the National Longitudinal Survey of Youth 1979 cohort. We estimate a proportional hazard model with competing risks, distinguishing different types of separations. A higher unemployment rate at the start of an employment relationship increases the probability that the worker quits to take or look for another job, but it decreases the probability that the firm fires the worker. The net effect of these opposing forces on the overall duration of the employment is negative, but small, implying that match quality is weakly pro-cyclical. We also build a simple job-ladder model to interpret our empirical results.