Labor market flows: Evidence for Chile using microdata from administrative tax records

Abstract

We compute and characterize several labor flow measures using administrative tax records for all formal Chilean firms and employees. Our results show that labor mobility in Chile is significant by international standards, with the reallocation rate averaging 37% over the last decade, the highest value among the 25 OECD countries with comparable data. The magnitude of labor reallocation is highly heterogeneous among firms and industries, highest in Agriculture and Construction. Job reallocation is also high for smaller companies, primarily due to high firm creation and destruction rates, and for firms that pay lower wages. Finally, there is a significant procyclical behavior of workers’ entry rate and, in smaller magnitude, a countercyclical reaction of the exit rate, consistent with international evidence that shows job creation as the main adjustment mechanism over the business cycle.