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Churning and Labor Productivity in Economic Crisis, Differences between Foreign and Domestic Firms

Liis Roosaar, Urmas Varblane and Jaan Masso

Eastern European Economics, 2022, vol. 60, issue 2, 113-148

Abstract: Our analysis of matched employee-employer data from Estonian firms (years 2006–2013) shows that an increase in labor churning is related to a positive change in labor productivity during an economic crisis. During boom years, churning is related to a negative change in labor productivity. Only in services during the crisis did foreign firms have a stronger positive relationship between labor churning and labor productivity changes than domestic firms. However, our analysis at the individual level does not confirm that, during a crisis, foreign firms in services hire more employees with characteristics that have been found to be related to productivity increases.

Date: 2022
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DOI: 10.1080/00128775.2021.1971540

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