Working Paper: CEPR ID: DP1713
Authors: Simon Burgess; Julia Lane; David Stevens
Abstract: This paper uses a unique panel dataset of firms and workers to investigate the relationship between the firm?s lifecycle and the reallocation of labour. We distinguish labour reallocation associated with job reallocation, and reallocation of workers over a fixed configuration of jobs. We find that firms at the beginning and end of their lifecycles contribute disproportionately to labour market flows, with sorting between firms particularly important among young firms, whereas sorting within firms is more important among mature firms. We also find that high churning flows are associated with a lower probability of a young firm surviving.
Keywords: job reallocation; worker reallocation; lifecycle of firms; death of firms
JEL Codes: J60; J63; L20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high churning rates (J63) | lower survival probabilities for young firms (L26) |
| young firms (M13) | significant sorting effects in job reallocation (J62) |
| mature firms (D25) | more internal sorting (Y50) |
| young and dying firms (L26) | account for nearly a third of job reallocation (J63) |
| young and dying firms (L26) | account for a quarter of churning flows (F32) |
| labour market dynamics (J29) | firm performance (L25) |