ABSTRACT : Job flows are typically defined on the basis of the employment changes at the plant level. When calculated in this way, the job creation rate was 22.4% and destruction rate 23.8% in the Finnish business sector in the four-year period 2000-2004. However, when the different occupations (using seven occupational categories) in the same plant are interpreted as distinct jobs, the job creation rate is 30.6% and destruction rate 32.0%. It is found that employment mobility is much greater than needed for the given amount of the net employment change and intra- and inter-plant restructuring. This so-called “excess worker reallocation” or “churning” rate may be important for the diffusion of productivity spillovers in the economy or for the accumulation of the workers´ human capital. The study examines the worker mobility between plants as well as along the occupational ladders in the plants’ internal labor markets. It is found that micro-level dynamics of employment have interesting links with wage formation, and in particular, with its business cycle dynamics. This kind of knowledge is useful for theoretical modelling of business dynamics.
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Paper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number
1177.