The turnover of jobs and workers in a deep recession: evidence from the Finnish business sector

Abstract

Job and worker flows in the Finnish business sector are studied during a deep recession in the early 1990s. The data set covers effectively the whole work force. The gross job and worker flow rates are fairly high. The evidence suggests that the adjustment of labor input has happened through a reduced hiring rate rather than through an increased separation rate. However, during the recession the group of declining plants included more and larger plants than before, which led to reduced employment. Excess worker turnover (churning) and excess job reallocation have been low during the recession. The evidence of the countercyclicality of job reallocation is mixed. The flows are calculated both for the whole business sector, and for seven main industries. Services have clearly higher flow rates than manufacturing, but the cyclical changes in the flows are fairly similar in all industries. To test the sensitivity of the results to data sources, job flows are calculated from three different statistics.