We estimate how exogenous worker exits affect firms’ demand for incumbent workers and new hires. Drawing on administrative data from Germany, we analyze 34,000 unexpected worker deaths, which, on average, raise the remaining workers’ wages and retention probabilities. The average effect masks substantial heterogeneity as positive wage effects are concentrated among coworkers in the same occupation as the deceased. We quantify the deviation from a frictionless benchmark model and structurally estimate the size of replacement costs implied by the reduced-form evidence. Our estimates imply large costs of replacing incumbent workers and thus point to substantial frictions in the labor market, especially in thin markets for skill.