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Earnings Growth, Job Flows and Churn

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  • Satoshi Tanaka
  • Lawrence Warren
  • David Wiczer

Abstract

How much do workers making job-to-job transitions benefit from moving away from a shrinking and towards a growing firm? We show that earnings growth in the transition increases with net employment growth at the destination firm and, to a lesser extent, decreases if the origin firm is shrinking. This implies job-to-job transitions with the cross-firm job flow have 23% more earnings growth than average. This balances the negative effect from leaving a shrinking firm against the positive from going to a growing firm and removes turnover-related hires because gross hiring has a much smaller association with earnings than net employment growth.

Suggested Citation

  • Satoshi Tanaka & Lawrence Warren & David Wiczer, 2020. "Earnings Growth, Job Flows and Churn," Department of Economics Working Papers 20-03, Stony Brook University, Department of Economics.
  • Handle: RePEc:nys:sunysb:20-03
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    Cited by:

    1. Fatih Karahan & Serdar Ozkan & Jae Song, 2019. "Anatomy of Lifetime Earnings Inequality: Heterogeneity in Job Ladder Risk vs. Human Capital," Staff Reports 908, Federal Reserve Bank of New York.
    2. Bachmann, Rüdiger & Bayer, Christian & Merkl, Christian & Seth, Stefan & Stüber, Heiko & Wellschmied, Felix, 2021. "Worker churn in the cross section and over time: New evidence from Germany," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 781-797.

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