Job-Hoppers Could Boost Productivity

The study produced three notable findings. First, only about half of job changes moved workers from companies with relatively low productivity to those with higher levels. While the net result of the labor reallocation was toward higher-productivity companies, that trend hid a high level of job churn whose productivity implications mostly canceled out.

Second, although the overall flow of job reallocation looked almost random, the researchers determined that workers who moved from one job directly to another were more likely to go up the productivity ladder than workers who passed through periods of unemployment. This is consistent with the standard theory that workers who search for new positions while still employed tend to find the sorts of new jobs that are more commonly available at higher-productivity companies.

Lastly, Chile’s productivity gains from job transitions were due largely to the movement of a relatively narrow set of workers. Transitions from low- to high-productivity jobs were not on average spread equally among demographic groups, the researchers find. Rather, job changes among younger workers, women, and those who earned high wages relative to others the same age were relatively more likely to boost productivity—and accounted for the lion’s share of productivity gains in the economy, according to the study. The net contributions of other large groups were modest or even negative. And workers who changed jobs most often contributed proportionally little to overall productivity growth.

The research suggests that it’s not enough merely to encourage all workers to change jobs. Increasing output necessarily involves promoting employment mobility among the set of workers most likely to hop to newly formed businesses that are growing and hiring—something policymakers could do by making pensions and healthcare benefits portable, easing access to childcare, and, where appropriate, lowering entry barriers that are based on age and credentials.