Productivity Spillovers of Superior Firms Through Worker Mobility

Knowledge transfers across firms through labor mobility can generate positive productivity spillovers. When workers move from one firm to another, they bring obtained knowledge and experience to the receiving firm. Therefore, labor mobility is expected to have a positive impact on the productivity of enterprises. This study investigates the link between knowledge diffusion and labor mobility using a comprehensive matched employer-employee dataset of the Dutch manufacturing sector. I examine the hypothesis that hiring workers from high-productivity firms increases the productivity of hiring firms. The analysis suggests a positive association between hiring from more productive firms and productivity gain one year after hiring. Furthermore, I find that worker mobility within the same sector is associated with more diffusion of knowledge and skills than worker mobility across sectors. Additionally, my results suggest that hiring by large firms is associated with productivity gains as long as at least some new workers come from more productive firms, even if the average productivity gap across all new hiring is negative.