High-productivity firms protect jobs from layoffs, not because workers stay

High-productivity firms have lower worker turnover. This paper finds that this is because they lay off fewer people, not because people quit less often. These firms have a financial buffer against economic shocks, which lets them avoid cutting jobs when times get tough.

Everyone assumed good firms kept workers because workers were happy and didn't quit. It turns out, good firms keep workers because they can absorb economic hits without resorting to layoffs. This means a firm's financial health, not just its culture or employee satisfaction, directly protects jobs.