The distribution of the gains from spillovers through worker mobility between workers and firms

•We estimate output gains from spillovers through worker mobility and their distribution.•Of these total output gains (0.1% per year), two-thirds goes to the firms.•At most 8% goes to the workers who bring spillovers.•The other workers enjoy the remainder.•This gains distribution implies abnormally high rents to the hiring firms.

Knowledge spillovers through worker mobility between firms, found in previous research, imply that knowledge production within firms creates a positive externality to the hiring firms and their workers. We calculate the shares in the gains from spillovers retained by these parties using matched employer-employee data from Danish manufacturing. We find that around two-thirds of the total output gain (0.1% per year) is netted by the firms as extra profit, about a quarter goes to the incumbent workers as extra wages, while the workers who bring spillovers receive no more than 8% of it. This gains distribution, which favors the hiring firms, is similar for different types of moving workers, and is stable over time.