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Our analysis of matched employee-employer data from Estonian firms (years 2006–2013) shows that an increase in labor churning is related to a positive change in labor productivity during an economic crisis. During boom years, churning is related to a negative change in labor productivity. Only in services during the crisis did foreign firms have a stronger positive relationship between labor churning and labor productivity changes than domestic firms. However, our analysis at the individual level does not confirm that, during a crisis, foreign firms in services hire more employees with characteristics that have been found to be related to productivity increases.

Churning and Labor Productivity in Economic Crisis, Differences between Foreign and Domestic Firms