Worker Flows, Entry, and Productivity in New Zealand's Construction Industry

Motu Working Paper No. 18-02

53 Pages Posted: 3 May 2018

See all articles by Adam B. Jaffe

Adam B. Jaffe

Brandeis University; Motu Economic and Public Policy Research; National Bureau of Economic Research (NBER)

Nathan Chappell

Motu Economic and Public Policy Research Trust

Date Written: February 28, 2018

Abstract

We use administrative data on the population of New Zealand construction firms from 2001-2012, along with linked data on their employees and working proprietors, to study the relationships among worker flows, entry, and firm productivity. We find that job churn is prevalent in construction, with around 60 percent of firm-worker pairs not existing previously or not existing subsequently. The data also show that firms gaining or losing any labour are more productive than static firms, and that firms gaining labour from other construction firms are 4-6 percent more productive than the industry average in a given year. Our analysis suggests such firms are productive in part because of knowledge flows from other construction firms; in our preferred specification, with firm fixed effects, a standard deviation increase in the productivity of new employees’ previous firms is associated with a 0.6 percent increase in productivity. New entrants are more productive than pre-existing firms. Firms that enter briefly and disappear exhibit high productivity for that brief period, and firms that enter and persist exhibit a persistent productivity advantage that averages about 5%, but which grows as experience accumulates. The entry and worker-knowledge-flow phenomena are distinct, in that the entry effect is not explained by employee composition, and non-entrant firms also benefit from worker knowledge flows.

Keywords: Firm Productivity, Firm Churn, Job Churn, Creative Destruction, Knowledge Flows

JEL Classification: D24, L74, J63

Suggested Citation

Jaffe, Adam B. and Chappell, Nathan, Worker Flows, Entry, and Productivity in New Zealand's Construction Industry (February 28, 2018). Motu Working Paper No. 18-02 , Available at SSRN: https://ssrn.com/abstract=3164043 or http://dx.doi.org/10.2139/ssrn.3164043

Adam B. Jaffe (Contact Author)

Brandeis University ( email )

Waltham, MA 02454-9110
United States
781-736-2251 (Phone)
781-736-2263 (Fax)

HOME PAGE: http://www.brandeis.edu/global/people/faculty/jaff

Motu Economic and Public Policy Research ( email )

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New Zealand

HOME PAGE: http://motu.org.nz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nathan Chappell

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

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