Using Worker Flows in the Analysis of the Firm
U.S. Census Bureau, LEHD Technical Paper No. TP-2003-09
41 Pages Posted: 25 Oct 2004
Date Written: May 2005
This paper uses a novel approach to measure firm entry and exit, mergers and acquisition. It uses information about the flows of clusters of workers across business units to identify longitudinal linkage relationships in longitudinal business data. These longitudinal relationships may be the result of either administrative or economic changes and we explore both types of newly identified longitudinal relationships. In particular, we develop a set of criteria based on worker flows to identify changes in firm relationships - such as mergers and acquisitions, administrative identifier changes and outsourcing. We demonstrate how this new data infrastructure and this cluster flow methodology can be used to better differentiate true firm entry/exit and simple changes in administrative identifiers. We explore the role of outsourcing in a variety of ways but in particular the outsourcing of workers to the temporary help industry. While the primary focus is on developing the data infrastructure and the methodology to identify and interpret these clustered flows of workers, we conclude the paper with an analysis of the impact of these changes on the earnings of workers.
Keywords: Successor/Predecessor firms, matched employer/employee data, worker
JEL Classification: L20, L23, J00
Suggested Citation: Suggested Citation