Julie L. Hotchkiss, M. Melinda Pitts, and John C. Robertson
Working Paper 2004-19
August 2004

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This paper uses unique employer-employee matched administrative data files to determine that firm and industry employment dynamics play significant roles in the earnings gains of workers who change jobs and in different ways across the business cycle. Among the more notable results is the finding that job-changers who leave a firm that is shutting down experience a greater earnings loss than job-changers who leave a firm that is merely contracting. In addition, the earnings loss from changing industries where firm-specific human capital is likely to be important has the potential of creating a much greater barrier to labor mobility during recessionary times than during an expansion.

JEL classification: J23, E32, J21

Key words: labor mobility, industry dynamics, administrative data

The authors gratefully acknowledge Sarah Dougherty. They also thank Mary Daly, Joshua Pinkston, and Madeline Zavodny for helpful comments. The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content to M. Melinda Pitts, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, Georgia 30309-4470, 404-498-7009, Melinda.Pitts@atl.frb.org.