Empirical evidence for the “Great Resignation”

Abstract

bls.gov/opub/mlr/2022/article/empirical-evidence-for-the-great-resignation.htm Article November 2022 This article empirically assesses the observed increase in job resignations during the coronavirus disease 2019 (COVID-19) pandemic and examines the pandemic's uniqueness from prior macroeconomic events. The article shows that, compared with the dot-com recession of 2001 and the 2007-09 Great Recession, the pandemic produced unique quits rates, and this finding holds across U.S. census regions. In addition, the results show that, during the pandemic, quits rates in firms with fewer than 1,000 employees were higher than quits rates in firms with more than 1,000 employees. A regression analysis assessing the antecedents of the pandemic's quits rate also reveals that while the rates for hires and job openings had a positive effect on quits rates, hourly earnings and the unemployment rate exerted a negative effect. The article empirically confirms the "Great Resignation" phenomenon, which is characterized by record job quitting during the pandemic, and suggests that this phenomenon may be ameliorated by increasing hourly earnings, thereby increasing employees' switching costs. However, if the phenomenon persists, it is conceivable that labor-saving investments that were hitherto economically infeasible will become feasible, altering the nature of work and the workplace.