Job Creation and Job Destruction, Worker Reallocation, and Wages

Abstract

Using Danish firm (workplace) data on employment reallocation merged with individual records, the effects of job creation/destruction and worker reallocation on wages are estimated using fixed effects techniques. After controlling for business cycle fluctuations, job creation is found to increase male wages. The effect of net job creation seems present at all phases of the business cycle. Entry wages as well as wages of low tenure workers appear much more sensitive to idiosyncratic job creation than wages of those who are already employed in a given firm. Except for entry wages, female wages are found insensitive to net job creation.