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Job Ladders by Firm Wage and Productivity

Author

Listed:
  • Antoine Bertheau

    (Banque de France)

  • Rune Vejlin

    (Aarhus University)

Abstract

Using a unique dataset that combines daily employment spell information with firm-level accounting data from Denmark, we explore workers' progression up firm wage and productivity ladders. We find that: (1) Total Factor Productivity (TFP) emerges as a more effective indicator of the job ladder than the average wage paid, with more workers experiencing employer-to-employer transitions from lower to upper tiers of the productivity ladder compared to the wage ladder. (2) Recessions have a cleansing effect when using the productivity job ladder: Lower productivity firms experience a steeper decline in employment growth compared to their higher-tier counterparts. In contrast, due to decreased poaching, high wage firms exhibit greater employment reductions, leading to a sullying effect when using the wage job ladder. High productivity firms also experience greater employment cyclicality due to decreased poaching during recessions. However, firms at the lower end of the productivity spectrum face a more pronounced employment reduction during recessions as they intensify layoffs and reduce hiring from the unemployment pool. (3) Indirect productivity measures, such as sales per worker, can hide or even reverse the cleansing effect of recessions. (Copyright: Elsevier)

Suggested Citation

  • Antoine Bertheau & Rune Vejlin, 2025. "Job Ladders by Firm Wage and Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 58, October.
    • Handle: RePEc:red:issued:23-8
    DOI: 10.1016/j.red.2025.101307
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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