Worker Turnover and Job Reallocation: Evidence from Matched Employer-Employee Data

This paper uses employer-employee data to jointly examine worker turnover and job flows in Ethiopia. We find substantial worker turnover (38%) at the aggregate level. Nearly half of this turnover is driven by establishment-level job flows, while the other half is accounted for by excess turnover or churning. A substantial part of hiring (separation) occurs among downsizing (growing) establishments, underscoring that worker flows are much higher than job reallocation across establishments. Churning of workers appears to be negatively associated with subsequent employment growth, and this relationship is stronger among employers that rely more on long-term relationships with workers.