The Timing of Labour Reallocation and the Business Cycle: Evidence for The Netherlands

In this paper we study the cyclical behaviour of job and worker flows in The Netherlands. We find that job flows move counter‐cyclically while worker flows move acyclically. The persistence of newly created jobs is strongly pro‐cyclical while the persistence of destroyed jobs is strongly counter‐cyclical. We also examine the relative importance of aggregate and sectoral versus idiosyncratic shocks. We find both shocks to be negatively correlated and idiosyncratic shocks to be somewhat more important in explaining the time variation of job reallocation. Finally, we find that gross job flows account for about one‐third of the worker flows. The remainder reflect churning.