We study whether workers progress up firm wage and size job ladders, and the cyclicality of this movement. Search theory predicts that workers should flow toward larger, higher paying firms. However, we see little evidence of a firm size ladder, partly because small, young firms poach workers from all other businesses. In contrast, we find strong evidence of a firm wage ladder that is highly procyclical. During the Great Recession, this firm wage ladder collapsed, with net worker reallocation to higher wage firms falling to zero. The earnings consequences from this lack of upward progression are sizable.
Haltiwanger, John C., Henry R. Hyatt, Lisa B. Kahn, and Erika McEntarfer.
"Cyclical Job Ladders by Firm Size and Firm Wage."
American Economic Journal: Macroeconomics,
Firm Behavior: Empirical Analysis
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Business Fluctuations; Cycles
Wage Level and Structure; Wage Differentials
Labor Turnover; Vacancies; Layoffs
Unemployment: Models, Duration, Incidence, and Job Search
Firm Performance: Size, Diversification, and Scope