Vacancy chains

Michael W. L. Elsby, Axel Gottfries, Ryan Michaels, David Ratner

Research output: Working paper

Abstract / Description of output

Replacement hiring—recruitment that seeks to replace positions vacated by workers who quit—plays a central role in establishment dynamics. We document this phenomenon using rich microdata on U.S. establishments, which frequently report no net change in their employment, often for years at a time, despite facing substantial gross turnover in the form of quits. We devise a tractable model in which replacement hiring is driven by a novel structure of frictions, combining firm dynamics, on-the-job search, and investments into job creation that are sunk at the point of replacement. A key implication is the emergence of vacancy chains. Quantitatively, the model reconciles the incidence of replacement hiring with the large dispersion of labor productivity across establishments, and largely replicates the empirical volatility and persistence of job creation and, thereby, unemployment.
Original languageEnglish
Publication statusE-pub ahead of print - Oct 2021

Keywords / Materials (for Non-textual outputs)

  • quits
  • replacement hiring
  • unemployment
  • vacancies
  • business cycles


Dive into the research topics of 'Vacancy chains'. Together they form a unique fingerprint.

Cite this