Working Paper: NBER ID: w30629
Authors: Simon Jäger; Jörg Heining
Abstract: We estimate how exogenous worker exits affect firms’ demand for incumbent workers and new hires. Drawing on administrative data from Germany, we analyze 34,000 unexpected worker deaths, which, on average, raise the remaining workers’ wages and retention probabilities. The average effect masks substantial heterogeneity: Coworkers in the same occupation as the deceased see positive wage effects; coworkers in other occupations experience wage decreases when a high-skilled or specialized worker dies. Our findings imply substantial replacement costs, which are larger in thin markets and when skills are specialized.
Keywords: worker deaths; labor demand; wages; replacement costs; human capital
JEL Codes: J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unexpected worker deaths (J28) | Increase in earnings of remaining incumbent workers (J39) |
| Unexpected worker deaths (J28) | Cumulative effect on earnings of all incumbent workers (J31) |
| Unexpected worker deaths (J28) | Increase in wages for remaining workers (J39) |
| Death of high-skilled worker (J63) | Wage decrease for coworkers in different occupations (J31) |
| Replacement costs (D25) | Increase in wages for remaining workers (J39) |
| Worker exits (J63) | Challenges in replacing workers with specific human capital (J24) |
| Worker exits (J63) | Substantial costs associated with replacing workers (J32) |