Unemployment incidence: labor turnover in the United States and West Germany

Abstract

Why does unemployment occur to workers, and how do the United States and West Germany differ in this respect? Within the current chapter, this question will be addressed from an analysis of worker flows between employment and unemployment. That is, the nature and magnitudes of such flows will be addressed in greater detail than has been done in the preceding, more descriptive analyses. This focus also implies a thorough analysis of heterogeneity in unemployment incidence, and hence the distribution of unemployment experiences across social groups in the U.S. and in West Germany. However, the key interest of the following analysis will be the attempt to achieve a deeper understanding of labor turnover processes underlying unemployment inflows in both economies. Basically, the current chapter will take up the perspective of unemployment incidence as being rooted in labor turnover, and will develop an empirical model to test institutional and structural effects on employer decisions to discontinue current job matches. A basic analytical distinction this model will seek to implement is the standard one between worker churning flows and job turnover flows (cf. Davis et al. 1996; Anderson and Meyer 1994; Burgess, Lane and Stevens 2000; Schettkat 1996a, 1996b; DiPrete 1993; DiPrete and Nonnemaker 1997; DiPrete et al. 1997). Of the two, job turnover refers to, broadly speaking, processes of job creation and destruction that may involved worker flows through unemployment, whereas worker churning represents turnover, fluctuation and exchange at existing jobs and businesses.

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