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Worker flows, job flows and firm wage policies

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Author Info
John Haltiwanger
Milan Vodopivec

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Abstract

Like many transition economies, Slovenia is undergoing profound changes in the workings of the labour market with potentially greater flexibility in terms of both wage and employment adjustment. To investigate the impact of these changes, we use unique longitudinal matched employer-employee data that permits measurement of employment transitions and wages for workers and enables links of the workers to the firms in which they are employed. We can thus measure worker flows and job flows in a comprehensive and integrated manner. We find a high pace of job flows in Slovenia especially for young, small, private and foreign-owned firms and for young, less educated workers. While job flows have approached the rates observed in developed market economies, the excess of worker flows above job flows is lower than that observed in market economies. A key factor in the patterns of the worker and job flows is the determination of wages in Slovenia. A base wage schedule provides strict guidelines for minimum wages for different skill categories. However, firms are permitted to offer higher wages to an individual based upon the success of the worker and/or the firm. Our analysis shows that firms deviate from the base wage schedule significantly and that the idiosyncratic wage policies of firms are closely related to the observed pattern of worker and job flows at the firm. Firms with more flexible wages (measured as less compression of wages within the firm) have less employment instability and are also able to improve the match quality of their workers. Copyright (c)The European Bank for Reconstruction and Development, 2003.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/1468-0351.00147
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Publisher Info
Article provided by The European Bank for Reconstruction and Development in its journal The Economics of Transition.

Volume (Year): 11 (2003-06)
Issue (Month): 2 (June)
Pages: 253-290
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Handle: RePEc:bla:etrans:v:11:y:2003-06:i:2:p:253-290

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  1. John Haltiwanger & Stefano Scarpetta & Helena Schweiger, 2006. "Assessing Job Flows across Countries: The Role of Industry, Firm Size and Regulations," IZA Discussion Papers 2450, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Naércio Aquino Menezes Filho & Marc Andreas Mündler & Garey Ramey, 2006. "The Structure of Worker Compensation in Brazil, with a Comparison to France and the United States," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. Naercio Filhoz & Marc-Andreas Muendler & Garey Ramey, 2005. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States¤," University of California at San Diego, Economics Working Paper Series 2005-01R, Department of Economics, UC San Diego. [Downloadable!]
  4. Peter Huber & Kristin Smeral, 2006. "Measuring worker flows," Applied Economics, Taylor and Francis Journals, vol. 38(14), pages 1689-1695, August. [Downloadable!] (restricted)
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