Oxford bulletin of economics and statistics vol:57 issue:1 pages:5-24
This paper uses a panel of 993 UK manufacturing companies to analyze a pattern of gross job creation and gross job destruction during the 1970's and early 1980's. At any point in time and even within narrowly defined sectors gross job creation and gross job destruction coexist. Job creation and job destruction are inversely related and gross job reallocation, the sum of the two, is counter-cyclic. Gross job destruction is more variable than gross job creation over the cycle. The idiosyncratic component of gross job flows is substantial. However, it is predominantly aggregate and sectoral shocks which explain the main fraction of the total time variation of gross job flows. We compare the reported findings with those of the US manufacturing sector and conclude that although the magnitude of gross job flows in lower in the UK, the cyclical properties are very similar. Finally, in the light of the reported results, we discuss a number of anomalies of existing theory and point out new theories explaining the observed pattern of job creation and job destruction.