The Effect of Learning by Hiring on Productivity

This article focuses on the phenomenon of interfirm labor mobility as a potential channel forknowledge transfer. Using data from the Danish employer-employee register covering the period1995–2005, we investigate how knowledge carriers—technicians and highly educated workersrecruited from a donor firm—contribute to knowledge diffusion and enhanced productivity in thehiring (recipient) firm. Structural estimation of the hiring firms’ production functions shows thatthe impact of the recruitment of knowledge carriers on a firm’s value added is an increase of1%–2%. Several robustness checks confirm this finding.