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Worker Mobility in Production Networks

Marvin Cardoza¹; Francesco Grigoli²; Nicola Pierri³; Cian Ruane⁴

¹ Directorate General of Internal Taxes, Santo Domingo , · ² Research Department, International Monetary Fund, Washington, DC , · ³ Fiscal Affairs Department, International Monetary Fund, Washington, DC , · ⁴ Central Bank of Ireland , Dublin ,

This paper documents that production networks play an essential role in the job search and matching process. We document five facts about worker mobility in production networks using employer–employee data matched with the universe of firm-to-firm transactions for the Dominican Republic: (1) workers move between buyers and suppliers almost twice as much as predicted by standard labour market characteristics, (2) movers between buyers and suppliers experience larger earnings increases than other movers, (3) incumbent workers earnings increase when their firm hires from its buyers or suppliers, (4) firm-to-firm trade increases following supply chain hires, and (5) hiring from buyers or suppliers is associated with stronger firm growth. Survey evidence points to supply chain-specific human capital and better information about job applicants as the main reasons for hiring within the supply chain. These results reveal a new channel through which factors affecting the supply chain, such as international outsourcing or contracting frictions, impact labour markets.

DOI

10.1093/restud/rdae114

Volume

92 (6)

Pages

3682-3703

Language

en

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