Working Paper: NBER ID: w28657
Authors: Elias Albagli; Mario Canales; Chad Syverson; Matias Tapia; Juan Wlasiuk
Abstract: A large body of work has highlighted the importance of employment reallocation as a driver of aggregate productivity growth, but there is little direct evidence on the extent of this process at the firm-worker level. We use an administrative matched employer-employee census for Chile to provide novel insights into the relationship between job transitions and productivity variation across firms, and to quantify the contribution of different worker groups to aggregate reallocation. As many theories would predict, worker flows from lower- to higher-productivity firms are larger than those of the opposite sign. Empirically, however, this is only marginally so. Almost half of all transitions occur “down the firm productivity ladder.” This process is also highly heterogeneous along several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through non-employment, and among firms in the upper end of the productivity distribution. They are also much more likely for young, high-skilled workers, whose job transitions comprise in an accounting sense the lion’s share of aggregate productivity change. Interestingly, workers with the highest job turnover rates contribute proportionally the least to aggregate productivity changes. Aggregate reallocation gains are therefore mostly explained by a relatively narrow subset of job transitions. Put together, this evidence implies that the productivity mechanics of job reallocation yield a net benefit, but this hides massive and heterogeneous gross flows underneath.
Keywords: productivity; labor market; job transitions; Chile; matched employer-employee data
JEL Codes: D2; E23; J2; J6; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor market fluidity (J60) | Job transitions (J62) |
| Job transitions (J62) | Productivity implications (O49) |
| Younger, high-skilled, and female workers (J21) | Productivity gains (O49) |
| Job transitions (J62) | Aggregate productivity gains (O49) |
| Proportion of transitions moving up the productivity ladder (J62) | Job churning (J63) |