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Worker Separations in a Nonstationary Corporate Environment

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Author Info

  • Dohmen, Thomas

    ()
    (University of Bonn)

  • Pfann, Gerard A.

    ()
    (Maastricht University)

Abstract

This paper investigates differences in worker turnover characteristics between periods of workforce expansion and contraction in a firm. We derive a Cox proportional hazard model from a simple model of job separation based on the expected surpluses from the firm and its workers. We account for non-stationarity in the baseline hazard reversing the role of calendar time and employment duration (Imbens (1994)), and estimate the model using personnel data from a large Dutch aircraft manufacturer over a period from January 1987 until March 14th, 1996, one day before its bankruptcy. Performance evaluations, blue versus white collar employment, and career paths within the firm are found to play an important role explaining differences in turnover behavior. A generally important result is that smooth functional forms of the age effect on worker mobility can produce misleading results, blurring a better understanding of the design of early retirement schemes for corporate reorganizations.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 201.

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Length: 88 pages
Date of creation: Sep 2000
Date of revision:
Handle: RePEc:iza:izadps:dp201

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Keywords: personnel economics; Turnover;

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References

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  1. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
  2. Gautier, Pieter A. & Berg, Gerard J. van den & Ours, Jan C. van, 1999. "Separations at the firm level," Serie Research Memoranda 0016, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  3. Kuhn, Peter, 1988. "A Nonuniform Pricing Model of Union Wages and Employment," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 473-508, June.
  4. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  5. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538.
  6. Imbens, G W, 1994. "Transition Models in a Non-stationary Environment," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 703-20, November.
  7. Pfann, Gerard A., 2000. "Options to Quit," IZA Discussion Papers 197, Institute for the Study of Labor (IZA).
  8. Macleod, W.B. & Malcomson, J.M., 1991. "Investments, Hold Up and the Reform of Market Contracts," Cahiers de recherche 9114, Universite de Montreal, Departement de sciences economiques.
  9. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  10. Farber, Henry S, 1994. "The Analysis of Interfirm Worker Mobility," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 554-93, October.
  11. Robert E. Hall & Edward P. Lazear, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," NBER Working Papers 0864, National Bureau of Economic Research, Inc.
  12. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December.
  14. Christian Dustmann & Costas Meghir, 1999. "Wages, experience and seniority," IFS Working Papers W99/01, Institute for Fiscal Studies.
  15. Kuhn, Peter & Robert, Jacques, 1989. "Seniority and Distribution in a Two-Worker Trade Union," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 485-505, August.
  16. Hamermesh, Daniel S & Pfann, Gerard Antonie, 1996. "Adjustment Costs in Factor Demand," CEPR Discussion Papers 1371, C.E.P.R. Discussion Papers.
  17. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-80, September.
  18. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  19. Prescott, Edward C & Visscher, Michael, 1980. "Organization Capital," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 446-61, June.
  20. Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1994. "The Wage Policy of a Firm," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 921-55, November.
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Citations

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Cited by:
  1. Thomas Dohmen & Hartmut Lehmann & Mark E. Schaffer, 2008. "Wage policies of a Russian firm and the financial crisis of 1998: Evidence from personnel data - 1997 to 2002," CERT Discussion Papers 0801, Centre for Economic Reform and Transformation, Heriot Watt University.
  2. Gielen, A. C. & Ours, J.C. van, 2005. "Age-specific Cyclical Effects in Job Reallocation and Labor Mobility," Discussion Paper 2005-86, Tilburg University, Center for Economic Research.
  3. Heinz, Matthias & Drzensky, Frank, 2013. "The Hidden Costs of Downsizing," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79764, Verein für Socialpolitik / German Economic Association.
  4. Bernhard Boockmann & Susanne Steffes, 2010. "Workers, Firms, or Institutions: What Determines Job Duration for Male Employees in Germany?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 64(1), pages 109-127, October.
  5. Dohmen, Thomas J., 2004. "Performance, seniority, and wages: formal salary systems and individual earnings profiles," Labour Economics, Elsevier, vol. 11(6), pages 741-763, December.
  6. Boockmann, Bernhard & Fries, Jan & Göbel, Christian, 2012. "Specific measures for older employees and late career employment," ZEW Discussion Papers 12-059, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. repec:lan:wpaper:4796 is not listed on IDEAS
  8. Boockmann, Bernhard & Steffes, Susanne, 2007. "Seniority and Job Stability: A Quantile Regression Approach Using Matched Employer-Employee Data," ZEW Discussion Papers 07-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. repec:lan:wpaper:4362 is not listed on IDEAS
  10. Boockmann, Bernhard & Steffes, Susanne, 2005. "Individual and Plant-level Determinants of Job Durations in Germany," ZEW Discussion Papers 05-89, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. repec:lan:wpaper:4491 is not listed on IDEAS
  12. V Maltezou & G Johnes, 2008. "It''S Been A Long Time: A Comparative Analysis Of Job Duration In Banking," Working Papers 596221, Lancaster University Management School, Economics Department.
  13. Piekkola, Hannu, 2002. "Transferability of Human Capital and Job Switches," Discussion Papers 794, The Research Institute of the Finnish Economy.
  14. Mok, Penny & Mason, Geoff & Stevens, Philip & Timmins, Jason, 2012. "A Good Worker is Hard to Find: Skills Shortages in New Zealand Firms," Occasional Papers 12/5, Ministry of Economic Development, New Zealand.

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