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November 13, 2013


Ralph Musgrave

One “transition” not mentioned above is “employment to employment”, i.e. going straight from one job to the next with no intervening unemployment. J.P. Mattila in a paper in the American Economic Review in 1974, “Job Quitting and Frictional Unemployment” found that just over half those changing jobs found their new job before leaving their old one.

That knocks a bit of hole in the conventional idea that some unemployment is inevitable because of people changing jobs. And in fact if we put every single unemployed person on to Job Guarantee (with those refusing the work not being counted as unemployed) then all those changing jobs would go straight from one job to the next with no intervening unemployment: bit of an extreme scenario, but there’s no harm in considering extreme scenarios.


The step up in the E-to-U flow, from around 350k pcm to 400k pcm after 2008, will also have a knock-on effect in the reporting of median gross annual earnings for full-time employees.

The ONS bases this figure on workers who have been in the same job for at least 12 months (so it's not actually median for all workers, just for a subset).

If a higher percentage of the labour force are regularly moving in and out of short-term employment, and if that cohort tends towards the bottom end of the income scale, this will push up the median figure.

I don't know how significant this is, but it's another pointer to the increasing opacity of the ONS stats with regard to the labour market and "real" income.

Deviation From the Mean

I suspect that we actually have vast over employment if you are to judge employment on peoples desire to work. I reckon most people would love to work less hours than they do now.

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