Job Ladders by Firm Wage and Productivity

We identify which jobs are more desirable than others as revealed by workers’ transitions on the firm wage and productivity ladders using employer-employee data matched with firms’ financial data for 20 years in Denmark. We conclude that revenue-based TFP is a better ranking measure of the job ladder than the average wage paid, since highly productive firms create more jobs than high wage firms, and they do so by poaching more workers from other firms. When the unemployment rate increases, the difference in growth rates between high and low productivity firms becomes larger. The opposite is true for the difference between high and low wage firms. Measuring productivity using sales per worker, as done in previous studies, instead of TFP reduces the magnitude or even reverses the sign of our estimates such that the difference in growth rates between high and low productivity measured by sales per worker becomes smaller in recessions