Journal of Political Economy Vol. 133 No. 11 2025
Vacancy Chains
Abstract
Replacement hiring plays a central role in establishment dynamics. US establishments frequently report no net change in their employment, often for years, despite facing substantial gross turnover. We devise a tractable model in which replacement hiring is driven by a novel structure of frictions, combining firm dynamics, on-the-job search, and investments into job creation that are sunk at the point of replacement. A key implication is the emergence of vacancy chains. Quantitatively, the model reconciles the incidence of replacement hiring with large cross-establishment dispersion in labor productivity and largely replicates the volatility and persistence of job creation and unemployment.
- DOI
- 10.1086/737234
- Volume
- 133
- Issue
- 11
- Pages
- 3550-3604
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref