Worker Flows and Job Flows: A Quantitative Investigation

Worker ows and job ows behave dierently over the business cycle. We investigate the sources of the dierences by studying quantitative properties of a multiple-worker version of the search/matching model that features endogenous job separation and intra-rm wage bargaining. Our calibration incorporates micro- and macro-level evidence on worker and job ows. We show that the dynamic stochastic equilibrium of the model replicates important cyclical features of worker ows and job ows simultaneously. In particular, the model correctly predicts that hires from unemployment move countercyclically while the job creation rate moves procyclically. The key to this result is to allow for a large hiring ow that does not go through unemployment but is part of job creation, for which procyclicality of the job nding rate dominates its cyclicality. We also show that the model generates