Antoine Bertheau, CREST

Employment and Skill Reallocation over the Business Cycle: Evidence from Danish Data

This paper presents evidence about employment dynamics of heterogeneous workers across heterogeneous firms in Denmark from 1986 to 2013. We compare firms at the top and at the bottom of the size, wage, and productivity distributions in terms of job-to-job mobility and mobility involving a period of non-employment. Several regularities stand out. First high-wage, high-productivity and (young) small firms grow via job-to-job mobility at all times. Second, high-wage, low-productivity and (young) small firms sharply contract during the Great Recession. This is mainly driven by a decline in hiring. We proceed by documenting which workers in terms of education are reallocated over the cycle. We find that less-educated workers are more likely to be reallocated directly to high-paying firms than more educated workers in booms. In recessions, less-educated workers are more likely to be laid off from all types of firms relative to more educated workers. We relate our findings to empirical implications of new developments of search and matching literature that seek to explain the cyclical pattern of employment reallocation.

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