Macroeconomic Effects of Job Reallocations: A Survey

  • Giovanni Gallipoli University of British Columbia, Canada; Becker-Friedman Institute, University of Chicago, USA; and Rimini Centre for Economic Analysis, Italy
  • Gianluigi Pelloni Wilfrid Laurier University, Canada; The Johns Hopkins University, SAISBologna, Italy; and Rimini Centre for Economic Analysis, Italy


This paper appraises the literature on the macroeconomic effects of job reallocations. We overview different methodological approaches to the problem of observational equivalence of aggregate and sectoral shocks and draw two main conclusions. First, the non-directional nature of reallocation shocks holds the key to the fundamental identification problem. The second conclusion is that sectoral reallocation of labor has been responsible for no less that 1/4 and no more than 2/3 of the variance of aggregate unemployment in postwar data. This wide range indicates that the importance of labor reallocation may change over time, being larger at particular historical junctures.