identified in the figure. Point B indicates a hiring rate of 25 accompanied by the unchanged separation rate of 20. In this case, the growth was accomplished
entirely through a revised hiring strategy. Point C shows the employer choosing to maintain hiring at 20, but reducing separations to 15, which illustrates a very
different personnel management strategy. Points D and E represent adjustment of both hiring and attrition strategies. Each strategy implies a different level of
churning: point B involves a churning rate of 40, C 30, D 20 and E 50. The standard case considered in theory models of zero churning occurs where the
Ž .
Ž .
458 line intersects the vertical axis JFR 0 or the horizontal axis if JFR - 0 . Similar argument applies for a decline in employment.
We will address the question we have set ourselves using this diagram as a framework for organizing the data. Do expanding firms tend to move upwards
Ž .
Ž raising hires, not reducing separations or leftwards maintaining hires, reducing
. separations ? Similarly, do declining firms move downwards or rightwards? Given
Ž .
Ž .
our data description device of 458 lines JFR and distance along them CFR , the natural way to display the data would be as a continuum of density plots lying
along the 458 lines. Visually, this would be very difficult, so we can equivalently show the data as a box plot of CFR split up by narrow JFR bands.
7
3. Empirical description of job and churning flows
Ž .
The evidence on this is presented in Fig. 2. Positive negative job flow rates Ž
.
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correspond to 458 lines in Fig. 1 that intersect the vertical horizontal axis. The density function of CFR out along any particular 458 line is the variable summa-
rized in the box plot. It is immediately apparent that churning is characteristic of Ž
most of the employers in the dataset 90 of employers in most job bands engage .
have positive churning flows . Churning levels in excess of 10 characterize more than 75 of the employers in most job bands. The figure also shows that median
churning generally increases as absolute job flows increase. At both the bottom and the top of the job flow distribution, churning is both higher in magnitude and
more disperse. The pattern is also relatively symmetric across positive and negative job flow bands.
Ž .
This ubiquitous churning confirms the findings of Hamermesh et al. 1996 that not only do contracting employers still hire workers but also workers leave
expanding employers.
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We can show this most strikingly by plotting the his-
7
The box plot shows the distribution of churning flows for each band of the job flow rate. For each Ž
. Ž
job flow rate band, the graph shows the 25th and 75th percentile the limits of the box , the median the .
line within the box and the lines emerging from the box show the upper and lower adjacent values Ž
. extreme values .
8
These are ‘wide’ 458 lines to give enough points to summarise.
9
This pattern is consistent throughout the 1985–1994 period: although the graph shows all time periods, a quarter by quarter analysis shows similar patterns.
Fig. 2. Box plot of churning rates against job flow rates.
tograms of hiring and separations rates by job flow bands: see Fig. 3. The figure shows a pattern, which is remarkably similar to that found in the Dutch data:
although hiring rates are higher for expanding employers, contracting employers still hire. The separation pattern is almost the mirror image of hiring, demonstrat-
ing that even expanding employers have workers who exit.
This section has established that there is quite a complex micro relationship between churning and job flows at the level of the employer. We now move to a
Ž more formal analysis of this relationship and allow for differences over time the
. Ž
. overall macro environment and between firms firm characteristics .
4. Job and churning flows and firm characteristics
