Gross Worker Flows over the Life Cycle

Abstract

We analyze the gross worker flows over the life cycle by constructing a quantitative general equilibrium model. Using U.S. data, we first document the life-cycle patterns of flows across different labor market states (employment, unemployment, and not in the labor force), as well as job-to-job transitions. We then build a model of the aggregate labor market that incorporates the life cycle of workers, consumption-saving decisions, and labor market frictions. We estimate the model and use it to examine the effects of policies on aggregate labor market outcomes. In particular, we analyze a taxes-and-transfers policy and an unemployment insurance policy.