Description

A large body of work has highlighted the importance of employment reallocation as a driver of aggregate productivity growth, but there is little direct evidence on the extent and nature of this process. We use an administrative matched employer-employee census for Chile to provide novel insights on the relationship between productivity gaps between firms and job transitions. As expected, the fraction of worker flows reflecting movements from lower- to higher-productivity firms is greater than that of the opposite sign, but only marginally so. Almost half of all transitions occur "down the firm-productivity ladder." This process is also highly heterogeneous across several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through non-employment. They are also much more likely for young, highskilled workers, whose job transitions comprise in an accounting sense the lion’s share of aggregate productivity growth. Interestingly, workers with higher job turnover rates contribute proportionally the least to aggregate productivity growth. Put together, this evidence is suggests that the productivity benefit of job reallocation might have a net benefit, but this benefit reflects massive and heterogeneous gross flows underneath.