Biology Forums - Study Force

How does the quit rate behave over the business cycle?

The quit rate moves in a pro-cyclical fashion.  That is to say, the quit rate is high when the economy is expanding and the unemployment rate is falling.  When the economy is expanding, job opportunities are abundant and wages increase.  As a consequence, the expected payoff to leaving one job for another is higher, other things equal, at the top of the business cycle.  On the other hand, the quit rate decreases as the economy weakens at the bottom of the business cycle.  When times are bad there are relatively few attractive job opportunities and wages and wage growth tend to be depressed.  Under such circumstances, the expected payoff to quitting for another job is much lower if not negligible and workers are much more likely to stay in their current jobs.