Earnings growth, job flows and churn

How much do workers making job-to-job transitions benefit from moving away from a shrinking and towards a growing firm? Matched employer-employee data show that earnings growth in the transition increases with net employment growth at the destination firm and, to a lesser extent, decreases if the origin firm is shrinking. These results are not driven by composition, that different workers are going to growing or from shrinking firms, but rather implies that firm dynamics themselves are key to workers’ earnings growth during job-to-job transitions. Further, firms’ net employment growth rather than gross hires mostly drives the growth.