This article shows a remarkably strong relationship between job switching and nominal wage growth. We also find a fairly strong relationship between job switching and the cyclical component of inflation. Furthermore, job switching seems to be predictive of both wage growth and inflation.

Most economic theories of hiring and job seeking assume that businesses post vacancies when they demand more labor. Workers then apply for the job, and the most qualified candidate is hired. However, as those who have ever recruited or applied for a job know, the recruiting process is...