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Worker flows, entry, and productivity in New Zealand’s construction industry

Adam Jaffe () and Nathan Chappell ()
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Nathan Chappell: Motu Economic and Public Policy Research

No 18_02, Working Papers from Motu Economic and Public Policy Research

Abstract: We use administrative data on the population of New Zealand construction firms from 2001-2012, along with linked data on their employees and working proprietors, to study the relationships among worker flows, entry, and firm productivity. We find that job churn is prevalent in construction, with around 60 percent of firm-worker pairs not existing previously or not existing subsequently. The data also show that firms gaining or losing any labour are more productive than static firms, and that firms gaining labour from other construction firms are 4-6 percent more productive than the industry average in a given year. Our analysis suggests such firms are productive in part because of knowledge flows from other construction firms; in our preferred specification, with firm fixed effects, a standard deviation increase in the productivity of new employees’ previous firms is associated with a 0.6 percent increase in productivity. New entrants are more productive than pre-existing firms. Firms that enter briefly and disappear exhibit high productivity for that brief period, and firms that enter and persist exhibit a persistent productivity advantage that averages about 5%, but which grows as experience accumulates. The entry and worker-knowledge-flow phenomena are distinct, in that the entry effect is not explained by employee composition, and non-entrant firms also benefit from worker knowledge flows.

Keywords: Firm productivity; firm churn; job churn; creative destruction; knowledge flows (search for similar items in EconPapers)
JEL-codes: D24 L74 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff and nep-lab
Date: 2018-02
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Working Paper: Worker Flows, Entry and Productivity in the New Zealand Construction Industry (2018) Downloads
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