The Impact of Labour Turnover: Theory and Evidence from UK Micro-Data
AbstractWe analyse the impact of labour turnover on profits. We extend the efficiency wage model of Salop (1979) by separating incumbent and newly hired workers in the production function. We show that an exogenous increase in the turnover rate can increase profits, but only where firms do not choose the wage. This effect of turnover varies across firms as it depends on turnover costs, the substitutability of incumbents and new hires and other factors. We test our model on UK cross-sectional establishment-level data. We find that our predictions are consistent with the data.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 05/10.
Date of creation: May 2005
Date of revision: May 2007
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Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-14 (All new papers)
- NEP-BEC-2005-05-14 (Business Economics)
- NEP-LAB-2005-05-14 (Labour Economics)
- NEP-MAC-2005-05-14 (Macroeconomics)
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- Sarah Brown & Gaia Garino & Christopher Martin, 2007. "Labour Turnover and Firm Performance," Working Papers, The University of Sheffield, Department of Economics 2007012, The University of Sheffield, Department of Economics, revised Sep 2007.
- Mamede, Ricardo, 2006.
"Towards an integrated approach to industry dynamics and labour mobility,"
3994, University Library of Munich, Germany.
- Ricardo Mamede, 2009. "Toward an integrated approach to industry dynamics and labor mobility," Industrial and Corporate Change, Oxford University Press, vol. 18(1), pages 139-163, February.
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