Authors
Abstract
We analyze quits and layoffs leading to unemployment or non-participation using real-time Current Population Survey data. Standard employment to unemployment (EU) and employment to non-participation (EN) flows substantially mischaracterize the nature of job separations and their cyclical properties. Layoffs are 20% more common than EU flows, while quits are 45% less common than EN flows. Over the business cycle, layoffs contribute 15% more to unemployment fluctuations than EU and are the main driver of employment fluctuations. The negative correlation of quits and layoffs reduces the volatility of total separations, but laid off workers are more likely to stay in the labor force during downturns, amplifying unemployment volatility by 25%. These data are useful to understand slack and improve labor market forecasting.
