Cyclical labor market sorting

We consider sorting in the labor market, that is, whether high-or low-productivity workers and firms tend to match with each other, and how this varies over time using U.S. linked employer-employee data. Composition changes of workers and firms move in opposite directions over the business cycle. During and after recessions, low-rank workers are less likely to work, while the employment share of low-rank firms increases. The agreement between worker and firm ranks increases in the early stages of labor market downturns.Published by Elsevier B.V.