The Productivity Effects of Worker Mobility Between Heterogeneous Firms

Abstract

We analyze the effect of worker inflows on establishments’ productivity, using German data. Previous studies for other countries have found positive effects of hiring workers from superior (more productive or higher paying) firms. Ranking establishments by their median wage, we find that inflows from inferior establishments seem to increase hiring establishments’ productivity. Further empirical analyses suggest our findings are due to a positive selection of such inflows from their sending establishments. These workers might have to find a better job match in order to advance their careers, an interpretation supported by the finding that the effect is driven by workers with short tenure at their previous employer. Our findings reflect the increasingly assortative pattern of worker mobility in Germany found in a related strand of literature.

Productivity spillovers through labor flows: productivity gap, multinational experience and industry relatedness

“…When we examined positive and negative productivity gap separately, we have shown that hiring workers from more productive companies is beneficial, however, hiring from less productive one in not harmful, which is consistent with the idea that employees apply the knowledge of better operations. These results are consistent with previous finding of Stoyanov & Zubanov (2012) and contradicts Stockinger & Wolf (2016). One can also note that our measure of productivity gap is composed of two parts: the magnitude of incoming workers, and the superiority of the firm they are coming from in terms of productivity.…”

“…However, according to the extant literature, it is far from trivial that the productivity gap effect is universally present regardless from the structure of the labor market. One counterexample is Germany where Stockinger and Wolf (2016) found no evidence for the productivity gap effect. Therefore, it is important to test the theory in an economy with different level of development and historical context from Denmark where the original model was developed (Stoyanov & Zubanov, 2012).…”