The employment rate for Black men worsened significantly relative to White men during the second half of the 20th century. We explore the role of broad sectoral shifts in labor demand over this period in explaining this trend. We first quantify changes in local employment rates and population in response to local labor demand shifts for both groups of workers. We then combine our estimates with a stylized model that incorporates frictional local labor markets and imperfect mobility across markets. Our framework enables us to aggregate local responses while accounting for geographic mobility and regional employment composition. We find that sectoral reallocation can account for at most, one-fifth of the total exacerbation in the employment rate differential between Black and White men over 1970–2010. Out-migration from harder-hit markets, while large, only slightly mitigates the impact of negative labor demand shifts. We also find that most of the predicted change in the employment rate differential is due to differential response rather than differential exposure to sectoral shifts across groups.

Younger workers tend to sort into younger firms, suggesting that the decline in U.S. business dynamism differentially affected labor market outcomes over the worker life cycle. In this paper, I develop an equilibrium labor market sorting model with both on-the-job search and two-sided, life-cycle heterogeneity to quantify the career consequences of firm aging. I find that it accounts for about 45 percent of the decline in the employer switching rate and about 15 percent of the decline in the employment-to-population ratio since the 1990s. Total welfare of employed workers declines by about 0.9 percent and younger workers experience larger losses.

This paper quantifies the contribution of unemployment inflows and outflows to cyclical changes in the unemployment rate. I show that the time series behavior of worker flows implies that they exhibit a specific dynamic structure. I then implement a simple identification strategy motivated by this evidence in order to empirically separate changes in job separation and job finding. I find that both margins contribute significantly to unemployment volatility and that their interaction is important for understanding the business cycle dynamics of the unemployment rate. My results suggest that models of the labor market should aim to capture this interaction as well as cyclical variation in job loss.