'The Job Ladder over the Business Cycle'

John Haltiwanger, Henry Hyatt, and Erika McEntarfer:

...young firms usually start small, and some of those small, young firms turn out to be highly productive and grow rapidly and poach workers away from other firms. It turns out that small, mature firms (those aged ten years or more) lose workers, on net, through poaching while young firms gain workers, on net, from poaching. Additionally, there is an important segment of large firms that offer low wages (e.g. in the retail trade sector). Those large, low-wage firms tend to hire non-employed workers, and this hiring shuts down during recessions. Moreover, workers at large, low-wage firms are often poached away by other firms. Understanding the factors that drive a wedge in the relationship between firm size, firm productivity and firm wages should be an active area for future research. Our findings suggest researchers should be cautious about using firm size as a proxy for productivity and wages in studying the dynamics of the economy.

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