Productivity Growth and Worker Reallocation

19 Pages Posted: 9 Jul 2005

See all articles by Rasmus Lentz

Rasmus Lentz

Boston University - Department of Economics; University of Copenhagen - Centre for Applied Microeconometrics

Dale T. Mortensen

Northwestern University - Department of Economics; IZA Institute of Labor Economics

Abstract

Productivity dispersion across firms is large and persistent, and worker reallocation among firms is an important source of productivity growth. An equilibrium model of growth and firm evolution designed to clarify the role of worker reallocation in the growth process is studied. We show that it explains the correlations between size measures and labor productivity found in Danish firm data. Conditions under which the reallocation of workers from less to more productive firms contributes to aggregate productivity growth in the economy modeled are derived. Finally, a proof of existence of an equilibrium solution to the model is also provided.

Suggested Citation

Lentz, Rasmus and Mortensen, Dale T., Productivity Growth and Worker Reallocation. International Economic Review, Vol. 46, No. 3, pp. 731-749, August 2005, Available at SSRN: https://ssrn.com/abstract=758062

Rasmus Lentz (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States
617-353-6324 (Phone)

University of Copenhagen - Centre for Applied Microeconometrics

University of Copenhagen, Building 26
Øster Farimagsgade 5
Copenhagen K., DK-1353
Denmark

Dale T. Mortensen

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States
847-491-8230 (Phone)
847-491-7001 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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