Reassessing Cyclical Changes in Workers' Labor Market Status: Gross Flows and the Types of Workers Who Determine Them
This analysis, using Current Population Survey data, yields statistically compelling evidence that cyclical variations in gross flows of U.S. workers-that is, variations by business cycle phase in the number of workers transitioning from one labor market state to another each month-were substantially smaller in 1986-2005 than in 1968-86. The authors identify six types of workers who would be expected to contribute to cyclical variations in these flows. Counter-intuitively, one such group consists of individuals whose decisions to enter or exit the labor force are independent of labor market conditions. Estimates suggest that these "noncyclical movers" are an empirically important component of gross flows into the labor force. The authors contend that the presence of noncyclical movers precludes accurate measurement of the contributions of workers whose entry and exit decisions are consciously influenced by labor market conditions.