@workingpaper {343506,
	title = {How Substitutable Are Workers? Evidence from Worker Deaths},
	year = {Working Paper},
	note = {Job Market Paper},
	abstract = {




The substitutability between workers within a firm, and between incumbent workers and outsiders, matters for understanding the operation of internal labor markets and the consequences of worker turnover. To assess the substitutability of workers, I estimate how exogenous worker exits affect a firm{\textquoteright}s demand for incumbent workers and new hires. Using matched employer-employee data based on the universe of German social security records, I analyze the effects of 34,000 unexpected worker deaths and show that these worker exits on average raise the remaining workers{\textquoteright} wages and retention probabilities for a period of several years. These findings are difficult to reconcile with frictionless labor markets and perfect substitutability between incumbent workers and outsiders. The average effect masks substantial heterogeneity: Coworkers in the same occupation as the deceased see positive wage effects; coworkers in other occupations instead experience wage decreases when a high-skilled worker or manager dies. Thus, coworkers in the same occupation appear to be substitutes, while high-skilled workers and managers appear to be complements to coworkers in other occupations. Finally, when the external labor market in the deceased{\textquoteright}s occupation is thin, incumbents{\textquoteright} wages respond more and external hiring responds less to a worker death. The results suggest that thin external markets for skills lead to higher firm-specificity of human capital and lower replaceability of incumbents.



},
	author = {Simon J{\"a}ger}
}
