ER28 Worker flows, entry and productivity in New Zealand's construction industry (March 2018)

The report uses administrative data on the population of New Zealand construction firms from 2001-2012 along with linked data on their employees and working proprietors to study the relationships among worker flows, entry and firm productivity.

The report finds that job churn is prevalent in construction, with around 60% of firm-worker pairs not existing previously or not existing subsequently. Firms with new employees are more productive than those with no change in workforce, in part because of knowledge flows from other construction firms.

Entrants are more productive than pre-existing firms. Firms that enter briefly and disappear exhibit high productivity for that brief period, and firms that enter and stay exhibit a persistent productivity advantage that averages about 6% but grows as experience accumulates.

The entry and worker-knowledge-flow phenomena are distinct in that the entry effect is not explained by employee composition and non-entrant firms also benefit from worker knowledge flows.