Job mobility, reallocation and wage growth

A tale of two countries

This paper analyses the role of job mobility for job reallocation and aggregate wage growth in Norway and the United States using linked employer-employee data. It provides four main findings. First, despite lower overall job mobility in Norway, the speed of worker reallocation from low-wage to high-wage firms is similar to that in the United States. Second, job reallocation tends to be counter-cyclical in Norway, but pro-cyclical in the United States, due to the weaker tendency of high-wage firms in the United States to hoard workers during economic downturns. Third, the reallocation of workers from low to high wage firms through job-to-job mobility disproportionately benefits high-skilled workers in Norway and low-skilled workers in the United States. Fourth, the slowdown in aggregate wage growth primarily reflects a weakening of on-the-job wage growth in both countries rather than a reduced role of job reallocation between low and high-wage firms (although this does also play a role in the United States).

Available from January 13, 2021