November 1, 1998

Worker turnover at the firm level and crowding out of lower educated workers

In the Netherlands, as in many countries, unemployment rates of lower educated workers are higher and more cyclical than unemployment rates of higher educated workers.

This paper tests whether this is caused by the fact that more highly educated individuals occupy simple jobs in cyclical downturns. We use a unique firm-worker dataset to investigate this hypothesis. In addition, we examine to what extent workers with more years of schooling earn higher wages than their less educated colleagues at the same job level in the same firm. We find that at one of the lower job complexity levels, the difference between schooling of the inflow and the outflow increases in cyclical downturns. At the same time, workers with surplus schooling earn somewhat lower wages at this job level. For the other job complexity levels we find no evidence for crowding out.

Read more about