Productivity Spillovers Across Firms through Worker Mobility

Abstract

Using matched firm-worker data from Danish manufacturing, we observe firm-to-firm worker movements and find that firms that hired workers from more productive firms experience productivity gains one year after the hiring. The productivity gains associated with hiring from more productive firms are equivalent to 0.35 percent per year for an average firm. Surviving a variety of statistical controls, these gains increase with education, tenure, and skill level of new hires, persist for several years after the hiring was done, and remain broadly similar for different industries and measures of productivity. Competing explanations for these gains, knowledge spillovers in particular, are discussed. (JEL D24, J24, J62, L60, O33)

The distribution of the gains from spillovers through worker mobility between workers and firms

“…As in Stoyanov and Zubanov (2012), we define spillover potentials (SPs) as workers hired from firms with a higher TFP than that of their current employer. Assuming that the gains from SPs come solely in the form of their higher labor productivity, we capture the labor productivity difference between SPs and non SPs by specifying labor input in efficiency units:…”

“…(2) and (3)). We follow the approach of Stoyanov and Zubanov (2012) and identify SPs in firm i and year t as the workers hired in year t 1 from firms with a higher TFP than i in year t 2, the last full year when those workers were in their previous firms and had access to knowledge there. 5 Our specification of δ, 3 Although, for simplicity of exposition, in Eq.…”

“…Several recent empirical studies, including Gorg and Strobl (2005), Markusen and Trofimenko (2009), Balsvik (2011), Parrotta and Pozzoli (2012), and Stoyanov and Zubanov (2012), have documented the workings of this mechanism, linking firm productivity gains to hiring workers from technologically superior firms. 1 Since the latter receive no compensation from the firms that hire their workers, the existence of knowledge spillovers through worker mobility implies a positive externality.…”

Innovation through new blood

“…Importantly, they discover that flows within the same narrow 5-digit sector have a positive and statistically significant impact; this concerns about 12% of the total labour flows. Similarly, Boschma et al (2009) show Swedish firms become more productive through an inflow of employees with skills related (but not identical) to those already available within the company; and Stoyanov and Zubanov (2012) found significantly positive effects for Denmark, again in particular for intra-industry flows. They also indicate effects are more positive for more educated and skilled workers.…”

“…Although Ettlie (1980) in the management literature focused on innovation as the outcome, most studies focus on productivity instead, arguing this to be the final outcome, to be preferred above intermediates such as patents (Stoyanov and Zubanov 2012). However, Ettlie did indicate several interesting avenues of research, in particular suggesting manpower flows will have stronger effects on major compared to minor innovations (pp.…”