Turnover, learning by doing, and the dynamics of productivity in Brazil

Abstract

This paper analyses the effect of labor turnover on the productivity of Brazilian manufacturing firms between 1996 and 2013. We based our analysis on a theory of learning by doing, where turnover harms productivity by restricting the efficiency gains achieved by workers when they accumulate learning by producing in the same firm. We estimate a learning measurement that takes into account the loss of human capital – resulting from turnover – and its effect on total factor productivity (TFP). Our learning measurement is shown to be robust and has a consistent positive relationship with three different estimates of TFP.