DP1713 | The Reallocation of Labour and the Lifecycle of Firms

Publication Date

31/10/1997

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Abstract

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.