Hiring from suppliers and customers in the Dominican Republic

VoxDevTalk

Published 27.04.22

Workers who move to a customer or supplier are less likely to leave that firm down the line and also tend to get paid a higher salary

Read "Worker Mobility and Domestic Production Networks" by Marvin Cardoza, Francesco Grigoli, Nicola Pierri and Cian Ruane here.

It can be hard for job-seekers to prove their value to a prospective employer, not least because they don’t know that employer’s market, products or customers as well as they know those of their old firm. In this VoxDevTalk, Cian Ruane discusses his research in the Dominican Republic with Marvin Cardoza, Francesco Grigoli and Nicola Pierri looking at a worker’s value within the supply chain. 

The authors combine data from social security records on where people work and how much they earn with information on which firms are selling to and buying from each other from VAT records, and find that around one in five workers who change firms moves to a buyer or supplier of their original employer – a considerably larger share than would be implied by a random allocation of movers to firms. These moves within a supply chain tend to be high-quality matches. Workers who move to a customer or supplier are less likely to leave that firm down the line and also tend to get paid a higher salary. This suggests that the workers are bringing with them particularly useful knowledge and skills when they move along the supply chain in this way.