Labor Market Dynamics of Economic Restructuring

This study examines the labor markets of the United States and Germany, developing a framework for the analysis of labor market dynamics based upon the dynamic flow analysis, instead of the conventional labor stock data. Until recently, labor market analysis was mainly based on stock data, which is a suitable data source for structural and aggregate phenomena but does not allow for the analysis of processes that are behind the net changes identified by stock data. To identify the dynamic elements in the labor market, information on flows is needed. In recent years flow data have become available, indicating that an enormous amount of that labor market mobility is occurring every month.

The use of flow data to analyze questions of the mismatch in the labor market and the underlying labor market dynamics has been suggested recently by scholars. The analysis presented in this study of the labor market in the U.S. and Germany uses these data to link dynamic concepts of labor market adjustment to flow data. This study will be of interest to scholars in labor economics and industrial organization.

RONALD SCHETTKAT is currently a Fellow of the Netherlands Institute for Advanced Study and a Senior Fellow in the Labor Market and Employment research unit at the Wissenschaftszentrum in Berlin, Germany. He co-edited (with Eileen Applebaum) Labor Market Adjustments to Structural Change and Technological Progress (Praeger, 1990). Schettkat has worked for more than ten years in labor economics and has completed several international comparative studies.