Employment Reallocation over the Business Cycle: Evidence from Danish Data
with Rune Vejlin and Henning Bunzel.
Pdf
with Rune Vejlin and Henning Bunzel.
Pdf
Abstract
We present new evidence on how employment growth varies across firm types (size, productivity, and wage) and over the business cycle using Danish data covering almost 30 years. We decompose net employment growth into two recruitment margins: net hirings from/to employment (poaching) and net hirings from nonemployment. High-productivity firms are the most growing firms due to poaching. High wage firms poach almost as many workers, but shed an almost equal amount to non-employment. Large firms do not poach workers from smaller firms. In terms of employment cyclicality, we find that low-productive and low-wage firms shed proportionally more jobs in recessions. We relate our findings to recent models of employment fluctuations that jointly analyze worker and firm dynamics.
Turnover Costs: Evidence From Unexpected Worker Separations
with Pierre Cahuc, Simon Jäger, and Rune Vejlin
with Pierre Cahuc, Simon Jäger, and Rune Vejlin
Abstract
We analyze the effects of shocks to firms' employment to provide a novel estimate of turnover costs drawing on data for Danish firms and workers. Unexpectedly losing an employee due to death lowers profits in the subsequent four years by EUR 41,000. Our estimates of turnover costs are an order of magnitude larger than previous evidence based on firms' surveys of hiring and training costs. The larger estimates are driven by the imperfect replaceability of incumbent workers with outsiders. These manifest themselves as negative effects on value added even after employment has recovered as well as in higher labor costs to retain the remaining workers. Our evidence helps to resolve several crucial puzzles in search and matching models, which struggled to reconcile seemingly low turnover cost estimates with several other empirical regularities.
Abstract
This article studies reasons for internal hiring, i.e., re-assigning or promoting an employee instead of recruiting an external candidate. We exploit a representative survey of establishments covering all European Union countries to measure employers’
search for internal candidates. Internal search is a widespread practice: 66% of establishments typically search internally. The accumulation of specific skills and the provision of incentives for employees are the main advantages of hiring internally
in the theoretical literature. Ordered probit estimates show that on-the-job training and internal search are positively associated. On the contrary, incentive schemes such as variable pay are not associated with employer search. These results help to assess competing theories, and in particular, suggest that specific human capital is an important driver of internal hiring. Finally, we uncover two interesting facts that need further research: internal hiring is less likely in service firms and in noncompetitive product markets.
search for internal candidates. Internal search is a widespread practice: 66% of establishments typically search internally. The accumulation of specific skills and the provision of incentives for employees are the main advantages of hiring internally
in the theoretical literature. Ordered probit estimates show that on-the-job training and internal search are positively associated. On the contrary, incentive schemes such as variable pay are not associated with employer search. These results help to assess competing theories, and in particular, suggest that specific human capital is an important driver of internal hiring. Finally, we uncover two interesting facts that need further research: internal hiring is less likely in service firms and in noncompetitive product markets.
The Unequal Cost of Job Loss across Countries
with Edoardo Accabi, Andreas Gulyas, Stefano Lombardi, Cristina Barcelo, and Raffaele Saggio
Pdf.
with Edoardo Accabi, Andreas Gulyas, Stefano Lombardi, Cristina Barcelo, and Raffaele Saggio
Pdf.
Abstract
We document the consequences of losing a job across countries using a harmonized research design. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in-between. Key to these differences is that Southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums accounts for 40% to 95% of within country wage declines. The use of active labor market policies predicts a significant portion of the cross-country heterogeneity in earnings losses.
Employer-to-Employer Transitions and Time Aggregation Bias
with Rune Vejlin
Pdf. Revision requested by Labour Economics.
with Rune Vejlin
Pdf. Revision requested by Labour Economics.
Abstract
The rate at which workers switch employers without experiencing a spell of unemployment is one of the most important labor market indicators. However, Employer-to-Employer (EE) transitions are hard to measure in widely used matched employer-employee datasets such as those available in the US. We investigate how the lack of the exact start and end dates for job spells affect the level and cyclicality of EE transitions using Danish data containing daily information on employment
relationships. Defining EE transitions based on quarterly data overestimates the EE transition rate by approximately 30% compared to daily data. The bias is procyclical and is reduced by more than 10% in recessions. We propose an algorithm
that uses earnings and not just start and end dates of jobs to redefine EE transitions. Our definition performs better than definitions used in the literature.
relationships. Defining EE transitions based on quarterly data overestimates the EE transition rate by approximately 30% compared to daily data. The bias is procyclical and is reduced by more than 10% in recessions. We propose an algorithm
that uses earnings and not just start and end dates of jobs to redefine EE transitions. Our definition performs better than definitions used in the literature.