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The Bright Side Of Corporate Diversification: Evidence From Internal Labor Markets

  • Geoffrey Tate
  • Liu Yang
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    We estimate the labor market consequences of corporate diversification using worker-firm matched data from the U.S. Census Bureau. We find evidence that workers in diversified firms have greater cross-industry mobility. Displaced workers experience significantly smaller losses when they move to a firm in a new industry in which their former firm alsooperates. We also find more active internal labor markets in diversified firms. Diversified firms exploit the option to redeploy workers internally from declining to expanding industries. Though diversified firms pay higher wages to retain workers, their labor is also more productive than focused firms of the same size, age, and industry. Overall, internal labor markets provide a bright side to corporate diversification.

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    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 13-40.

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    Length: 55 pages
    Date of creation: Aug 2013
    Date of revision:
    Handle: RePEc:cen:wpaper:13-40
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