Using Worker Flows to Measure Firm Dynamics

Research Report

Using Worker Flows to Measure Firm Dynamics

Abstract

This paper takes a novel approach to measuring firm entry and exit, mergers, and acquisition, using information about the flows of clusters of workers across business units to identify longitudinal linkage relationships in longitudinal business data. In particular, we develop a set of criteria based on worker flows to identify changes in firm relationships. We demonstrate how this new data infrastructure and this cluster flow methodology can be used to better differentiate true firm entry/exit and simple changes in administrative identifiers. We explore the role of outsourcing in a variety of ways but in particular the outsourcing of workers to the temporary help industry.

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