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Declining job security

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Author Info
Robert G. Valletta

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Abstract

Although common belief and recent evidence point to a decline in "job security," the academic literature to date has been noticeably silent regarding the behavioral underpinnings of declining job security. In this paper, I define job security in the context of implicit contracts designed to overcome incentive problems in the employment relationship. Contracts of this nature imply the possibility of inefficient separations in response to adverse shocks, and they generate predictions concerning the relationship between job security parameters-such as worker seniority, aggregate shocks, and sectoral economic conditions-and the probability of separations. To test these predictions, I use Panel Study of Income Dynamics (PSID) data for the period 1976-92, combined with tabulations from the March Current Populations Surveys (CPS) for the same (and earlier) years. I use these data to estimate binomial and multinomial models of job separation decisions. The results are consistent with a decline over time in the incentives to maintain existing employment relationships.

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Publisher Info
Paper provided by Federal Reserve Bank of San Francisco in its series Working Papers in Applied Economic Theory and Econometrics with number 98-02.

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Date of creation: 1998
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Handle: RePEc:fip:fedfam:98-02

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Related research
Keywords: Employment (Economic theory) ; Labor turnover;

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  1. Leora Friedberg & Michael Owyang, 2004. "Explaining the Evolution of Pension Structure and Job Tenure," NBER Working Papers 10714, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Eve Caroli, 2007. "Internal versus external labour flexibility: The role of knowledge codification," PSE Working Papers 2007-05, PSE (Ecole normale supérieure). [Downloadable!]
    Other versions:
  3. Eve Caroli, 2000. "Flexibilité interne versus Flexibilité Externe du Travail: Quels Enseignements peut-on Tirer de l'Approche de la Firme en termes de Compétences?," Research Unit Working Papers 0010, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
  4. Susan N. Houseman & Anne E. Polivka, 1999. "The Implications of Flexible Staffing Arrangements for Job Stability," Staff Working Papers 99-56, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  5. Yolanda K. Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston. [Downloadable!]
  6. Borland, J. & McDonald, J.T., 2001. "Displaced Workers in Australia 1984-1996: Macroeconomic Conditions and Structural Change," Department of Economics - Working Papers Series 824, The University of Melbourne. [Downloadable!]
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  7. Bilgehan Karabay & John McLaren, 2009. "Trade, Offshoring, and the Invisible Handshake," NBER Working Papers 15048, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Pedro S. Amaral, 2003. "Turbulence, Heterogeneity, and Wage Earnings Inequality," Macroeconomics 0309016, EconWPA. [Downloadable!]
  9. Thomas C. Buchmueller & John DiNardo, 2001. "Union Effects on Health Insurance Provision and Coverage in the United States," NBER Working Papers 8238, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. David Neumark & Deborah Reed, 2002. "Employment Relationships in the New Economy," NBER Working Papers 8910, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Jahn, Elke J. & Wagner, Thomas, 2008. "Job Security as an Endogenous Job Characteristic," Working Papers 08-6, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
  12. Robert G. Valletta, 1998. "Changes in the structure and duration of U.S. unemployment, 1967-1998," Economic Review, Federal Reserve Bank of San Francisco, pages 29-40. [Downloadable!]
  13. Erica Groshen & David Levine, 1998. "The rise and decline(?) of U.S. internal labor markets," Research Paper 9819, Federal Reserve Bank of New York. [Downloadable!]
  14. Luc Behaghel & Eve Caroli & Emmanuelle Walkowiak, 2007. "Innovation and skill upgrading: The role of external vs internal labour markets," PSE Working Papers 2007-04, PSE (Ecole normale supérieure). [Downloadable!]
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  15. John V. Duca & Carl M. Campbell, III, 2007. "The impact of evolving labor practices and demographics on U.S. inflation and unemployment," Working Papers 0702, Federal Reserve Bank of Dallas. [Downloadable!]
  16. Daniel Aaronson & Daniel G. Sullivan, 1998. "The decline of job security in the 1990s: displacement, anxiety, and their effect on wage growth," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 17-43. [Downloadable!]
  17. Patrick Francois & Joanne Roberts, 2000. "Contracting Productivity Growth," Working Papers jorob-99-02, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  18. Teresa Ghilarducci & Michael Reich, 1998. "Training and Pensions: Substitutes or Complements?," Institute for Research on Labor and Employment, Working Paper Series 1002, Institute of Industrial Relations, UC Berkeley. [Downloadable!]
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