DP1713 The Reallocation of Labour and the Lifecycle of Firms

Author(s): Simon Burgess, Julia Lane, David Stevens
Publication Date: October 1997
Keyword(s): Death of Firms, Job Reallocation, Lifecycle of Firms, Worker Reallocation
JEL(s): J60, J63, L2
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1713

This paper uses a unique panel dataset of firms and workers to investigate the relationship between the firm?s lifecycle and the reallocation of labour. We distinguish labour reallocation associated with job reallocation, and reallocation of workers over a fixed configuration of jobs. We find that firms at the beginning and end of their lifecycles contribute disproportionately to labour market flows, with sorting between firms particularly important among young firms, whereas sorting within firms is more important among mature firms. We also find that high churning flows are associated with a lower probability of a young firm surviving.