The Dynamics of Worker Reallocation Within and Across Industries

This paper uses an integrated employer-employee data set to answer two key questions: 1. What is the "equilibrium" amount of worker reallocation in the economy - both within and across industries? 2. How much does firm-level job reallocation affect the separation probabilities of workers? Consistent with other work, we find that there is a great deal of reallocation in the economy, although this varies substantially across demographic group. Much worker reallocation is within the economy, roughly evenly split between within and across broadly defined industries. An important new finding is that much of this reallocation is confined to a relatively small subset of workers that is shuffled across jobs - both within and across industries - in the economy. However, we also find that even for the most stable group of workers, firm level job reallocation substantially increases the probability of transition for even the most stable group of workers. Finally, workers who are employed in industries that provide low returns to tenure are much more likely to reallocate both within and across industries.