Job Recalls and Worker Flows over the Life Cycle


The share of jobless spells that end with recalls, i.e., returning to the previous job, as opposed to finding a new job, strongly increases over the life cycle, revealing vast heterogeneity in workers’ job-finding behavior over the life cycle despite only a mild decline in job-finding rates. We find the introduction of recall options into a match-quality job ladder search model reproduces all worker flow rates over the life cycle as in the data, and in particular, reconciles the puzzle of a positive comovement between separation and job-finding rate over the life cycle. We apply this framework to study the differential impact of labor market slack on entrants and experienced workers. We find that deterioration of aggregate matching efficiency hurts entrants more than experienced workers because job-finding prospects of entrants rely more on finding new jobs, whereas experienced workers get more recalls.

Working Paper