adjusted estimates of worker flows and job openings in jolts
DESCRIPTION
Adjusted Estimates of Worker Flows and Job Openings in JOLTS. May 2008 Steven Davis, University of Chicago and NBER Jason Faberman, Federal Reserve Bank of Philadelphia John Haltiwanger, University of Maryland and NBER Ian Rucker, Bureau of Labor Statistics - PowerPoint PPT PresentationTRANSCRIPT
Adjusted Estimates of Worker Flows and Job
Openings in JOLTS
May 2008
Steven Davis, University of Chicago and NBERJason Faberman, Federal Reserve Bank of PhiladelphiaJohn Haltiwanger, University of Maryland and NBERIan Rucker, Bureau of Labor Statistics
The views expressed are solely those of the authors and do not necessarily reflect the official positions or policies of the US Bureau of Labor Statistics, the US Bureau of the Census, the Federal Reserve Bank of Philadelphia, the Federal Reserve system or the views of their staff members.
Introduction
The behavior of hires and separations is an important topic for labor and macroeconomics Relevant for several classes of models
Labor search and matching, factor adjustment, etc. Useful in understanding important margins of
cyclical employment fluctuations e.g., are recessions hires-driven or job loss-driven?
JOLTS data are the best new source on hires and separations, but JOLTS data raise new questions Accurate measurement of magnitude, cyclicality of
worker flows critical to understanding employment fluctuations
What is the JOLTS?
JOLTS is a monthly survey of ~16,000 establishments Has employment, number of hires, number of separations
(by quits, layoffs & discharges, and other separations) throughout month, and number of job openings at end of month
Published statistics Begin in December 2000 Available by major industry and region for all nonfarm
establishments
Our study… Uses both published data and micro data for Jan-01 – Dec-06 Appeals to fact that JOLTS sample frame is the BED (QCEW)
data Focuses only on private establishments
JOLTS Measurement Issues
JOLTS has three notable measurement issues Two issues are observable in the published
data
JOLTS hires and separations estimates overstate growth relative to its benchmark estimates (CES)
Issue 1 – Overstatement of CES Growth
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Employment(000s)
Cumulative JOLTS Implied Employment
Employment Implied by JOLTS Hires - Separations
CES Employment
JOLTS Measurement Issues
JOLTS has three notable measurement issues Two issues are observable in the published
data
JOLTS hires and separations estimates overstate growth relative to its benchmark estimates (CES)
Magnitude of hires and separations data smaller than comparable estimates e.g., CPS gross flows data
Issue 2 – Worker Flow Magnitudes
Hires Rate Separations
Rate JOLTS Published Statistics 3.4 3.3 CPS Gross Flows, Fallick-Fleischman (2004)
6.4 6.4
Employer-employee data from Davis-Faberman-Haltiwanger (2006) also suggest estimates are understated
JOLTS Measurement Issues
JOLTS has three notable measurement issues Two issues are observable in the published data
JOLTS hires and separations estimates overstate growth relative to its benchmark estimates (CES)
Magnitude of hires and separations data smaller than comparable estimates e.g., CPS gross flows data
Micro data show: JOLTS over-represents stable establishments and misses entry and exit Nature of the survey frame and sample nonresponse
may play a role
Issue 3 – JOLTS Growth Rate Distribution
BED distribution also shows greater shifts in moving between high-growth and low-growth quarters
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Establishment Net Growth Rate (Percent)
JOLTS BED
Goals for this Paper
Adjust JOLTS hires, separations, and job openings to reflect the universe growth rate distribution Adjustment uses universe quarterly growth rate
distribution from BED as “true” underlying distribution in economy.
After frequency adjustment, it interacts BED distribution with JOLTS data on mean worker flows and job openings rate by growth rate to construct adjusted measures.
Compare adjusted and unadjusted JOLTS measures Quantify change in magnitudes Compare any differences in cyclicality
Summary of Results
Adjusted worker flows are about one-third larger than published statistics Separations increase disproportionately
through increase in layoff rate
Adjustment alters relative volatility of hires and separations Volatility of hires declines, while volatility of
layoffs doubles, making separations more volatile than hires overall
Little change in Beveridge Curve (unemployment and vacancies) behavior
Adjustment Approach
Adjustment based on identity that aggregate estimate is equal to weighted sum of values for each growth rate
xt(b) = mean value over growth rate “bin” b Can obtain from monthly JOLTS micro data
ft(b) = employment density for growth rate “bin” b Will replace JOLTS densities, after some
adjustments, with BED values
b
ttt bfbxX )()(
Adjustment Step 1 – Estimating Mean Rates
Estimate mean worker flow and job opening rates for fixed growth rate intervals using JOLTS microdata
Rates show nonlinear relations to growth Relations vary little over time
Hires Rate
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Rate
Job Openings Rate
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Rate
Layoffs Rate
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-25.0 -20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 15.0 20.0 25.0Establishment Net Growth Rate (Percent)
Rate
Quits Rate
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Rate
Adjustment Step 2 – Density Creation
Adjustment replaces JOLTS densities with BED densities by growth rate interval
Estimation of monthly-quarterly relationship:
Predicted JOLTS density based on BED data:
Issues to Consider Only BED densities account for entry, exit
Rescale JOLTS densities; add in estimates of entry and exit
BED are quarterly, JOLTS are monthly Adjust BED based on monthly-quarterly relations
observed in JOLTS
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Results
Published Statistics Adjusted Statistics Means (Quarterly Standard Deviations)
Hires Rate (H) 3.78 (0.23)
4.99 (0.16)
Separations Rate (S) 3.70 (0.16)
4.96 (0.19)
Quits Rate (Q) 2.06 (0.17)
2.36 (0.15)
Layoffs and Discharges Rate (L) 1.40 (0.07)
2.28 (0.15)
Other Separations Rate (R) 0.24 (0.02)
0.31 (0.04)
Job Openings Rate (V) 2.71 (0.38)
2.91 (0.35)
Magnitudes of hires, separations increase by one-third Volatility of separations increases (through layoffs) Net growth (H – S) decreases
More Results
Published Statistics Adjusted Statistics Relative Volatilities (Quarterly) (H)/ (S) 1.47 0.85 (Q)/ (L) 2.35 1.00 (H)/ (V) 0.61 0.46 (V)/ (U) 0.66 0.60
Adjusted vs. Published Hires
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Percent of Employment
Published Rate Adjusted Rate
Adjusted vs. Published Quits
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Percent of Employment Published Rate Adjusted Rate
Adjusted vs. Published Layoffs
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Percent of Employment Published Rate Adjusted Rate
Adjusted vs. Published Job Openings
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Percent of Employment Published Rate Adjusted Rate
Conclusions
JOLTS data have been a major innovation in the study of labor dynamics
Initial research revealed some measurement issues
Adjusted estimates provide a different picture of labor market than published estimates Magnitudes of worker flows higher by one-third Cyclicality of separations relatively more important
Our work stresses the importance of having a survey that is representative of both levels and growth when estimating flow statistics Work hopefully aids statistical agencies in achieving
this goal
Quits and Layoffs Rates
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Rate
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Rate
Time-Series Shifts in Distributions
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Establishment Net Growth Rate (Percent)
Low-Growth QuartersHigh-Growth Quarters10th Percentile of Distribution90th Percentile of Distribution
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Establishment Net Growth Rate (Percent)
Low-Growth QuartersHigh-Growth Quarters10th Percentile of Distribution90th Percentile of Distribution
Adjusted Quits and Layoffs
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Percent of Employment Adjusted Quits Adjusted Layoffs