Working Paper: NBER ID: w4625
Authors: Daniel S. Hamermesh; Wolter H. J. Hassink; Jan C. van Ours
Abstract: We provide a unified discussion of the relations among flows of workers, changes in employment and changes in the number of jobs at the level of the firm. Using the only available set of data (a nationally representative sample of Dutch firms in 1988 and 1990) we discover that: 1) Nearly half of all hiring is by firms where employment is not growing; 2) Over half of all firing is by firms that are not contracting; 3) Most firing is by firms that are also hiring; 4) Flows of workers within firms are small compared to flows into and out of firms; and 5) Accounting for simultaneous creation and destruction of jobs within firms adds roughly 15 percent to estimates of economywide job creation and destruction. The results imply that macroeconomic fluctuations can have substantial effects beyond those indicated by net employment changes at the firm level, and that studies of dynamic factor demand must account for variations in gross flows of workers.
Keywords: Labor Demand Dynamics; Job Creation; Job Destruction; Employment Flows
JEL Codes: J23; J24; E24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| macroeconomic fluctuations (E39) | labor demand dynamics (J23) |
| internal mobility and job flows (J62) | overall employment dynamics at the firm level (J63) |
| hiring in firms where employment is not growing (J63) | nuanced understanding of hiring dynamics (J29) |
| firing by firms that are not contracting (L29) | downsizing without a reduction in overall employment levels (J63) |
| most firing occurs in firms that are also hiring (J63) | simultaneous nature of hiring and firing processes (J63) |
| flows of workers within firms (J62) | flows into and out of firms (D25) |
| simultaneous job creation and destruction (J63) | estimates of economy-wide job creation and destruction (J63) |