Economic Research and Data

Economic Trends

Filling you in on the current state of the economy

01.24.07
Job-to-Job Movers

In a given month, a person's status relative to the labor market can fall in one of three categories: employed (E), unemployed (U) or not in the labor force (N). The extent of the movement among these categories provides valuable information about how well labor markets are functioning. For instance, though a higher flow from U to E or N to E implies a larger increase in employment, it may be the case that not all employed workers have the jobs that would suit them best. They, and the national economy overall, might benefit from a reallocation of workers across existing jobs. Such reallocations might be achieved efficiently through employer-to-employer (EE) transitions, which would not force the worker to go through a spell of unemployment.

A recent study by Bruce Fallick and Charles Fleischman of the Federal Reserve Board documents in detail the number and characteristics of people flowing between and within different categories of labor market status. The researchers estimate that in a given month, 2.6 percent of workers change their employers without a spell of unemployment. This employer-to-employer flow of workers, which constitutes 40 percent of all employer separations, accounts for more than 3 million job movers each month.

 

Gross Flows among Labor Market States

State in first month State in second month
(as a percent of state in first month, monthly)
  Same employer New employer Unemployed Not in the labor force
Employed
93.4
2.6
1.3
2.7
Unemployed
--
28.3
48.4
23.3
Not in the labor force
--
4.8
2.4
92.8

Source: Bruce Fallick and Charles Fleischman. "Employer-to-Employer Flows in the U.S. Labor Market: The Complete Picture of Gross Worker Flows." Finance and Economics Discussion Series 2004-34. Washington: Board of Governors of the Federal Reserve System, 2004.

 

Labor market flows also vary by age group. Workers aged 16 to 19 experience 15.6 percent of all separations and 16.7 percent of all flows into employment (which are sometimes called "accessions"). These contributions increase with workers’ ages until their mid-30s. Employer-to-employer flows follow a similar pattern. Because inexperienced young workers tend to look for better job matches early in their careers, the combined contribution of the two youngest groups to EE flows is almost double these groups’ employment share.

 

 

Employer-to-employer flows also change with demographic characteristics. EE transitions are responsible for 35 percent of the separations experienced by women and 35 percent of their accessions. But a greater share of men's separations and accessions come from EE transitions--44 percent and 42 percent, respectively. Although total flows into and out of employment are significantly higher for nonwhites, the share of EE flows does not vary with race. Even though EE flows decrease with education level, the share of EE flows within total separations and accessions rises with education.

 

Employment Transitions by Demographic Characteristics

Characteristic Separations
(EE+EU+EN)
EE Accessions
(EE+UE+NE)
Gender Female
7.0
2.5
7.1
Male
6.3
2.7
6.2
Race Nonwhite
7.7
2.6
7.8
White
6.4
2.6
6.5
Education <High school
12.0
3.4
12.5
High school diploma
6.6
2.6
6.5
Some college
6.4
2.7
6.5
College degree
4.6
2.3
4.6
>College
3.9
2.0
3.9



Economic Trends is published by the Research Department of the Federal Reserve Bank of Cleveland.

Views stated in Economic Trends are those of individuals in the Research Department and not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Materials may be reprinted provided that the source is credited.

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