The Dynamics of Worker Reallocation within and across Industries

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Abstract

This paper uses an integrated employer–employee data-set to answer two key questions: (i) What is the equilibrium amount of worker reallocation? (ii) How much does firm-level job reallocation affect worker reallocation? About 26% of workers who had previously exhibited a substantial degree of attachment to their employer change jobs in a given year. About two-thirds of this reallocation is roughly evenly split within and across broadly defined industries. Firm-level job and worker reallocation substantially increases the probability of transition for even the most stable group of workers, even after controlling for individual characteristics and firm and industry tenure.

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