Productivity spillovers through labor flows: The effect of productivity gap, foreign-owned firms, and skill-relatedness

What puts productivity spillovers into effect through worker mobility across firms? Productivity difference between the sending and receiving firms have been found to drive these spillovers; while an alternative explanation suggests that labor flows from foreign-owned companies provide productivity gains for the firm. We argue here that skill-relatedness across firms also matters because industry-specific skills are important for organizational learning and production. Hungarian employee-employer linked panel data from 2003-2011 imply that productivity gap rules out the effect of foreign spillovers. Furthermore, we find that flows from skill-related industries outperform the effect of flows from unrelated industries.