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How Substitutable Are Workers? Evidence from Worker Deaths

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  • Simon Jäger
  • Jörg Heining

Abstract

We estimate how exogenous worker exits affect firms’ demand for incumbent workers and new hires. Drawing on administrative data from Germany, we analyze 34,000 unexpected worker deaths, which, on average, raise the remaining workers’ wages and retention probabilities. The average effect masks substantial heterogeneity: Coworkers in the same occupation as the deceased see positive wage effects; coworkers in other occupations experience wage decreases when a high-skilled or specialized worker dies. Our findings imply substantial replacement costs, which are larger in thin markets and when skills are specialized.

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  • Simon Jäger & Jörg Heining, 2022. "How Substitutable Are Workers? Evidence from Worker Deaths," CESifo Working Paper Series 10126, CESifo.
    • Handle: RePEc:ces:ceswps:_10126
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    More about this item

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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