Excess Turnover and Employment Growth:Firm and Match Heterogeneity

Portuguese firms engage in intense reallocation, most employers simultaneously hire andseparate from workers, resulting in a large heterogeneity of flows and excess turnover. Largeand older firms have lower flows, but high excess turnover rates. In small firms, hires andseparations move symmetrically during expansion and contraction periods, on the contrary,large firms adjust their employment levels by reducing entry and not by increasingseparations. Most hires and separations are on fixed-term contracts and shrinking firmsreplace a larger share of their separations under fixed-term contracts, while expanding firmsreplace most of the separations under open-ended contracts. The comparison with the U.S.shows that while worker and job flows are lower in Portugal, the excess turnover isremarkably close in the two countries....