New hires, adjustment costs, and knowledge transfer—evidence from the mobility of entrepreneurs and skills on firm productivity

Emma Lappi

Industrial and Corporate Change, 2024, vol. 33, issue 3, 712-737

Abstract: This paper evaluates the productivity impacts and the subsequent adjustment costs associated with hiring different knowledge workers. I focus on the difference between hiring former entrepreneurs, employees who change jobs, and unemployed individuals. I am the first to evaluate the direct impact that hiring former entrepreneurs has on firm productivity and the heterogenous adjustment costs associated with the different types of new hires. I find no difference between the first-year adjustment costs of entrepreneurs and those of regular-wage employees. Hiring former entrepreneurs is a way to increase productivity after the first year of employment only if the former entrepreneurs are from the highest end of the ability distribution.

Date: 2024
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