Worker Mobility and Domestic Production Networks

By Marvin Cardoza, Francesco Grigoli, Nicola Pierri, Cian Ruane

September 25, 2020

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Marvin Cardoza, Francesco Grigoli, Nicola Pierri, and Cian Ruane. Worker Mobility and Domestic Production Networks, (USA: International Monetary Fund, 2020) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We show that domestic production networks shape worker flows between firms. Data on the universe of firm-to-firm transactions for the Dominican Republic, matched with employer-employee records, reveals that about 20 percent of workers who change firms move to a buyer or supplier of their original firm. This is a considerably larger share than would be implied by a random allocation of movers to firms. We find considerable gains associated with this form of hiring: higher worker wages, lower job separation rates, faster firm productivity growth, and faster coworker wage growth. Hiring workers from a supplier is followed by a rising share of purchases from that supplier. These findings indicate that human capital is easily transferable along the supply chain and that human capital accumulated while working at a firm is complementary with the intermediate products/services produced by that firm.

Subject: Human capital, International trade, Labor, Labor mobility, Production, Productivity, Trade balance, Wages

Keywords: Buyer-supplier relationship, Connected firm, Dummy variable, Firm pair control, Hiring firm, Human capital, Labor mobility, Origin firm, Production network, Productivity, Trade balance, Wages, Worker flow, WP

Publication Details

Pages:

60
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/205
Stock No:

WPIEA2020205
ISBN:

9781513557724
ISSN:

1018-5941

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