Worker Flows, Reallocation Dynamics, and Firm Productivity: New Evidence from Longitudinal Matched Employer-Employee Data

Elena Grinza

No 65, Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

Abstract: This paper investigates the impact of a firm's worker flows on productivity by using unique longitudinal matched employer-employee data. The analysis splits the firm's total worker flows into three components: workers' replacements (excess worker flows), hirings meant to increase the firm's employment level (net hirings), and separations of workers intended to decrease the firm's workforce (net separations). This allows isolating the impact of workers' replacements, which represent the most prominent (and compelling) feature of worker mobility. Endogeneity is dealt with by using a modified version of the Ackerberg et al.'s (2015) control function method, which explicitly accounts for firm fixed effects. The main finding is that excess flows foster productivity, and so do net hirings, while net separations hurt it. The effect of excess flows is heterogeneous and varies widely based on the types of replacements, the categories of workers involved, and the types of firms experiencing such flows. Overall, the findings of this paper highlight the importance of reallocation dynamics to reach better employer-employee matches and call for a reconsideration of policies concerning the flexibility of the labor market.

Keywords: Worker flows; excess worker flows; firm productivity; semi-parametric estimation of production functions; longitudinal matched employer-employee data. (search for similar items in EconPapers)
JEL-codes: D24 J63 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-02
New Economics Papers: this item is included in nep-bec, nep-eff and nep-gen
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.bemservizi.unito.it/repec/tur/wpapnw/m65.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Worker flows, reallocation dynamics, and firm productivity: new evidence from longitudinal matched employer–employee data (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:tur:wpapnw:065

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