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Does Worker Turnover Improve Productivity Growth?

Author

Listed:
  • Pekka Ilmakunnas
  • Mika Maliranta
  • Jari Vainiomäki

    (School of Management, University of Tampere)

Abstract

We examine the relationship between worker turnover and total factor productivity growth using a matched worker-plant data from Finnish manufacturing. The total turnover rate (sum of hiring and separation rates) is negatively, whereas inflow of new workers is positively, and outflow of workers negatively associated with productivity growth. This is consistent with general human capital. Excess worker turnover or churning that measures separations that lead to replacement hiring speeds up productivity growth. This indicates that worker turnover leads to better matches of available jobs and potential employees and therefore to higher productivity.

Suggested Citation

  • Pekka Ilmakunnas & Mika Maliranta & Jari Vainiomäki, 2003. "Does Worker Turnover Improve Productivity Growth?," Working Papers 0320, Tampere University, Faculty of Management and Business, Economics.
    • Handle: RePEc:tam:wpaper:0320
    as

    Download full text from publisher

    File URL: http://urn.fi/urn:isbn:951-44-5768-4
    File Function: First version, 2003
    Download Restriction: no
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