Cyclical Worker Flows: Cleansing vs. Sullying / John C. Haltiwanger, Henry R. Hyatt, Erika McEntarfer, Matthew Staiger.

Format:

Book

Author/Creator:

Haltiwanger, John C.

Contributor:

National Bureau of Economic Research.

Hyatt, Henry R.

McEntarfer, Erika.

Staiger, Matthew.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28802.

NBER working paper series no. w28802

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Do recessions speed up or impede productivity-enhancing reallocation? To investigate this question, we use U.S. linked employer-employee data to examine how worker flows contribute to productivity growth over the business cycle. We find that in expansions high-productivity firms grow faster primarily by hiring workers away from lower-productivity firms. The rate at which job-to-job flows move workers up the productivity ladder is highly procyclical. Productivity growth slows during recessions when this job ladder collapses. In contrast, flows into nonemployment from low productivity firms disproportionately increase in recessions, which leads to an increase in productivity growth. We thus find evidence of both sullying and cleansing effects of recessions, but the timing of these effects differs. The cleansing effect dominates early in downturns but the sullying effect lingers well into the economic recovery.

Notes:

Print version record

May 2021.