Passthrough of Firm Performance to Income and Employment Stability

To what extent do firms pass through idiosyncratic shocks to their workers? In this paper, we investigate question focusing on passthrough income for workers that stay in the firm and employment stability. We take an empirical approach use matched employer-employee data from Denmark, three different measures of performance (sales, value added, added per worker), two (earnings hourly wages). distinguish between unemployment job-to-job transitions. find is much higher permanent (5-9 percent) than transitory (1 shocks. Income blue collar small firms. On margin, worse increases both The risk especially pronounced collar, low-educated, low tenure workers, while effect transitions larger managers high-educated workers. also clear evidence non-linearities with negative driving