Working Paper: NBER ID: w21235
Authors: John Haltiwanger; Henry Hyatt; Erika McEntarfer
Abstract: Do the job-to-job moves of workers contribute to the cyclicality of employment growth at different types of firms? In this paper, we use linked employer-employee data to provide direct evidence on the role of job-to-job flows in job reallocation in the U.S. economy. To guide our analysis, we look to the theoretical literature on on-the-job search, which predicts that job-to-job flows should reallocate workers from small to large firms. While this prediction is not supported by the data, we do find that job-to-job moves generally reallocate workers from lower paying to higher paying firms, and this reallocation of workers is highly procyclical. During the Great Recession, this firm wage job ladder collapsed, with net worker reallocation to higher wage firms falling to zero. We also find that differential responses of net hires from non-employment play an important role in the patterns of the cyclicality of employment dynamics across firms classified by size and wage. For example, we find that small and low wage firms experience greater reductions in net hires from non-employment during periods of economic contractions.
Keywords: job-to-job flows; employment dynamics; firm size; firm wage; cyclicality
JEL Codes: E24; E32; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| job-to-job moves (J62) | reallocate workers from lower-paying to higher-paying firms (J68) |
| job-to-job moves (J62) | procyclical (E32) |
| economic expansions (E32) | increase in job-to-job flows (J62) |
| economic contractions (E32) | decrease in job-to-job flows (J62) |
| small and low-wage firms (J46) | greater reductions in net hires from nonemployment during economic contractions (J63) |
| large firms (L25) | poach workers from smaller firms (L29) |
| large firms (L25) | lose workers to smaller firms (J63) |
| job-to-job flows (J62) | employment dynamics (J63) |
| job-to-job moves (J62) | challenge conventional wisdom about cyclicality of employment growth (E32) |