TY - JOUR AU - Davis,Steven J. AU - Faberman,Jason AU - Haltiwanger,John C. TI - Labor Market Flows in the Cross Section and Over Time JF - National Bureau of Economic Research Working Paper Series VL - No. 17294 PY - 2011 Y2 - August 2011 UR - http://www.nber.org/papers/w17294 L1 - http://www.nber.org/papers/w17294.pdf N1 - Author contact info: Steven J. Davis Booth School of Business The University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-7312 Fax: 773/834-0733 E-Mail: Steven.Davis@ChicagoBooth.edu Jason Faberman Economic Research Department Federal Reserve Bank of Chicago 230 S. LaSalle St. Chicago, IL 60604 Tel: (312) 322-5274 Fax: (312) 322-2357 E-Mail: jfaberman@frbchi.org John C. Haltiwanger Department of Economics University of Maryland College Park, MD 20742 Tel: 301/405-3504 Fax: 301/405-3542 E-Mail: haltiwan@econ.umd.edu AB - Many theoretical models of labor market search imply a tight link between worker flows (hires and separations) and job gains and losses at the employer level. Partly motivated by these theories, we exploit establishment-level data from U.S. sources to study the relationship between worker flows and job flows in the cross section and over time. We document strong, highly nonlinear relationships of hiring, quit and layoff rates to employer growth in the cross section. Simple statistical models that capture these cross-sectional relationships greatly improve our ability to account for fluctuations in aggregate worker flows. We also evaluate how well various theoretical models and views fit the patterns in the data. Aggregate fluctuations in layoffs are well captured by micro specifications that impose a tight cross-sectional link between worker flows and job flows. Aggregate fluctuations in quits are not. Instead, quit rates rise and fall with booms and recessions across the distribution of establishment growth rates, but more so at shrinking employers. Finally, we use our preferred statistical models – in combination with data on the cross-sectional distribution of establishment growth rates – to construct synthetic JOLTS-type measures of hires, separations, quits and layoffs back to 1990. ER -