Employer-to-Employer Transitions and Time Aggregation Bias
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Employer-to-Employer Transitions and Time Aggregation Bias. / Bertheau, Antoine; Vejlin, Rune Majlund.
In: Labour Economics, Vol. 75, 102130, 2022.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Employer-to-Employer Transitions and Time Aggregation Bias
AU - Bertheau, Antoine
AU - Vejlin, Rune Majlund
PY - 2022
Y1 - 2022
N2 - The rate at which workers switch employers without experiencing a spell of unemployment is one of the most important labor market indicators. However, Employer-to-Employer (EE) transitions are hard to measure in widely used matched employer-employee datasets such as those available in the US. We investigate how the lack of the exact start and end dates for job spells affect the level and cyclicality of EE transitions using Danish data containing daily information on employment relationships. Defining EE transitions based on quarterly data overestimates the EE transition rate by approximately 30% compared to daily data. The bias is procyclical and is reduced by more than 10% in recessions. We propose an algorithm that uses earnings and not just start and end dates of jobs to redefine EE transitions. Our definition performs better than definitions used in the literature.
AB - The rate at which workers switch employers without experiencing a spell of unemployment is one of the most important labor market indicators. However, Employer-to-Employer (EE) transitions are hard to measure in widely used matched employer-employee datasets such as those available in the US. We investigate how the lack of the exact start and end dates for job spells affect the level and cyclicality of EE transitions using Danish data containing daily information on employment relationships. Defining EE transitions based on quarterly data overestimates the EE transition rate by approximately 30% compared to daily data. The bias is procyclical and is reduced by more than 10% in recessions. We propose an algorithm that uses earnings and not just start and end dates of jobs to redefine EE transitions. Our definition performs better than definitions used in the literature.
KW - Faculty of Social Sciences
KW - Labour market flows
KW - Employer-to-employer flows
KW - Measurement problems
KW - Time aggregation bias
U2 - 10.1016/j.labeco.2022.102130
DO - 10.1016/j.labeco.2022.102130
M3 - Journal article
VL - 75
JO - Labour Economics
JF - Labour Economics
SN - 0927-5371
M1 - 102130
ER -
ID: 290056198