Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage

90 Pages Posted: 6 Jun 2015

See all articles by John Haltiwanger

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Henry R. Hyatt

U.S. Census Bureau - Center for Economic Studies

Erika McEntarfer

U.S. Census Bureau

Multiple version iconThere are 2 versions of this paper

Date Written: June 1, 2015

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.

Suggested Citation

Haltiwanger, John C. and Hyatt, Henry R. and McEntarfer, Erika, Cyclical Reallocation of Workers Across Employers by Firm Size and Firm Wage (June 1, 2015). US Census Bureau Center for Economic Studies Paper No. CES-WP- 15-13. Available at SSRN: https://ssrn.com/abstract=2614605 or http://dx.doi.org/10.2139/ssrn.2614605

John C. Haltiwanger (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3504 (Phone)
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National Bureau of Economic Research (NBER) ( email )

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Institute for the Study of Labor (IZA) ( email )

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Henry R. Hyatt

U.S. Census Bureau - Center for Economic Studies ( email )

4700 Silver Hill Road
Washington, DC 20233
United States

Erika McEntarfer

U.S. Census Bureau ( email )

4600 Silver Hill Road
Washington, DC 20233
United States

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