Declining Worker Turnover : The Role of Short Duration Employment Spells

Using the Quarterly Workforce Indicators, we document that a significant amount of the decline in labor market turnover during the last two decades is accounted for by the decline in employment spells that last less than a quarter. Using a search and matching model that incorporates noisy signals about the quality of a worker-firm match, we show that improved candidate screening by firms can account for the decline in short-lived employment spells. Quantitative exercises show that this explanation can account for the observed changes in various labor market outcomes, whereas alternative potential explanations, such as increased hiring costs, cannot.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at "http://www.nber.org/papers/w26019"