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Job Flows And Productivity Dynamics: Evidence From U.S. Manufacturing

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  • WHEELER, CHRISTOPHER H.

Abstract

Through their influence on the cross-sectional distribution of productivity across firms and workers, job creation and destruction likely have an impact on the rate at which aggregate productivity changes over time. However, the nature of this effect is not, a priori, clear. Although a broad consensus has emerged suggesting that job destruction enhances productivity by eliminating inefficient production units, theories disagree with regard to the effect of job creation. If job flows represent the reallocation of labor from low- to high-productivity positions, job creation would boost productivity growth. If, instead, they represent changes in employment along a primarily low-skill dimension, the effect would be negative. This paper estimates the influence of job creation and destruction on total factor productivity (TFP) growth using annual data on four-digit U.S. manufacturing. As expected, the results reveal a positive association between job destruction and changes in TFP. Yet, they also indicate that job creation tends to have a negative effect on productivity growth.

Suggested Citation

  • Wheeler, Christopher H., 2007. "Job Flows And Productivity Dynamics: Evidence From U.S. Manufacturing," Macroeconomic Dynamics, Cambridge University Press, vol. 11(2), pages 175-201, April.
    • Handle: RePEc:cup:macdyn:v:11:y:2007:i:02:p:175-201_06
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    Cited by:

    1. N. Bora Keskin & John R. Birge, 2019. "Dynamic Selling Mechanisms for Product Differentiation and Learning," Operations Research, INFORMS, vol. 67(4), pages 1069-1089, July.
    2. Pekka Sinko, 2007. "Labour taxation, job creation and job destruction—Focusing on the role of wage setting," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(5), pages 583-604, October.

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