On the Driving Forces behind Cyclical Movements in Employment Movement and Job ReallocationSteven Davis and John C. Haltiwanger ,
5( 89 )
American Economic Review
Theory restricts short-run job creation and destruction responses and cumulative employment and job reallocation responses to allocative and aggregate shocks. We formulate these restrictions and implement them for postwar data on U.S. manufacturing. Allocative shocks are the main driving force behind cyclical movements in job reallocation, but their contribution to employment fluctuations varies greatly across alternative identification assumptions.