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The Concentration of Job Destruction

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  • Robert E. Hall

Abstract

A time series is concentrated if the expectation of its current value is a negative function of a moving average of past values up to all but the most recent past. Job destruction has the property of concentration in a model of heterogeneous jobs because an adverse shock destroys jobs in plants close to the margin of shutdown. Until other plants drift close to that margin, there are fewer plants that are vulnerable to another adverse shock. Concentration is easy to spot in the autocorrelations of a time series, which will be negative except for the first few lags. A simple model generates data displaying concentration. Data on job destruction and employment change for U.S. manufacturing show unambiguous evidence of concentration. According to the simple model, job creation is more persistent and thus less concentrated than is destruction, a property reflected in the data as well.

Suggested Citation

  • Robert E. Hall, 1999. "The Concentration of Job Destruction," NBER Working Papers 7025, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:7025
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    References listed on IDEAS

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    1. Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186, National Bureau of Economic Research, Inc.
    2. Ricardo J. Caballero & Mohamad L. Hammour, 1996. "On the Timing and Efficiency of Creative Destruction," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 805-852.
    3. Caballero, Ricardo J. & Hammour, Mohamad L., 1998. "Jobless growth: appropriability, factor substitution, and unemployment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 51-94, June.
    4. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 819-863.
    5. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, April.
    6. Robert E. Hall, 1999. "Aggregate Job Destruction and Inventory Liquidation," NBER Working Papers 6912, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Petri Böckerman & Mika Maliranta, 2001. "Regional disparities in gross job and worker flows in Finland," Finnish Economic Papers, Finnish Economic Association, vol. 14(2), pages 84-103, Autumn.
    2. Hall, Robert E., 2000. "Reorganization," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 52(1), pages 1-22, June.
    3. Davis, Steven J., 2000. "Reorganization: A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 52(1), pages 23-31, June.
    4. Piekkola, Hannu & Böckerman, Petri, 2002. "On Whom Falls the Burden of Restructuring? Evidence from Finland," Discussion Papers 714, The Research Institute of the Finnish Economy.
    5. Jinpeng MA, 2009. "Jobless Recovery, Idle Productivity, and the Role of Capital," EcoMod2009 21500060, EcoMod.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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