Searching, Recalls, and Tightness: An Interim Report on the Covid Labor Market

53 Pages Posted: 16 Nov 2020 Last revised: 27 Mar 2022

See all articles by Eliza Forsythe

Eliza Forsythe

University of Illinois at Urbana-Champaign - School of Labor & Employment Relations; University of Illinois at Urbana-Champaign - Department of Economics

Lisa Kahn

Yale School of Management

Fabian Lange

McGill University

David Wiczer

State University of New York (SUNY), Stony Brook

Date Written: November 2020

Abstract

We report on the state of the labor market midway through the COVID recession, focusing particularly on measuring market tightness. As we show using a simple model, tightness is crucial for understanding the relative importance of labor supply or demand side factors in job creation. In tight markets, worker search effort has a relatively larger impact on job creation, while employer profitability looms larger in slack markets. We measure tightness combining job seeker information from the CPS and vacancy postings from Burning Glass Technologies. To parse the former, we develop a taxonomy of the non-employed that identifies job seekers and excludes the large number of those on temporary layoff who are waiting to be recalled. With this taxonomy, we find that effective tightness has declined about 50% since the onset of the epidemic to levels last seen in 2016, when labor markets generally appeared to be tight. Disaggregating market tightness, we find mismatch has surprisingly declined in the COVID recession. Further, while markets still appear to be tight relative to other recessionary periods, this could change quickly if the large group of those who lost their jobs but are not currently searching for a range of COVID-related reasons reenter the search market.

Suggested Citation

Forsythe, Eliza and Forsythe, Eliza and Kahn, Lisa and Lange, Fabian and Wiczer, David, Searching, Recalls, and Tightness: An Interim Report on the Covid Labor Market (November 2020). NBER Working Paper No. w28083, Available at SSRN: https://ssrn.com/abstract=3731252

Eliza Forsythe (Contact Author)

University of Illinois at Urbana-Champaign - School of Labor & Employment Relations ( email )

504 East Armory Avenue
Champaign, IL 61820-6297
United States

HOME PAGE: http://sites.google.com/site/elizaforsythe/

University of Illinois at Urbana-Champaign - Department of Economics ( email )

410 David Kinley Hall
1407 W. Gregory
Urbana, IL 61801
United States

Lisa Kahn

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Fabian Lange

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

David Wiczer

State University of New York (SUNY), Stony Brook

Health Science Center
Stony Brook, NY 11794
United States

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