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External Job Churning and Internal Job Flexibility

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  • Peter Cappelli
  • David Neumark

Abstract

Concern about job instability and insecurity has a long history and has generated a considerable body of research across the social sciences, most recently focused on whether job stability and security have declined. Internally flexible systems for organizing work, sometimes called 'functionally flexible' systems, have been proposed as arrangements that can reduce job instability and insecurity by reducing the need for firms to rely on job cuts or contingent work to be able to respond to changes in their environments. Related arguments have been made with regard to contingent work - that it allows firms to adjust labor while 'buffering' their core of permanent workers from instability. We examine these arguments using three measures of instability and insecurity - voluntary and involuntary turnover and the use of contingent work - drawn from a national probability sample of establishments. We find evidence that internally flexible work systems are associated with reduced voluntary and involuntary turnover in manufacturing. But in the rest of the economy and indeed overall, they tend to be positively associated with all three measures. Further, the use of contingent work is, in fact, positively related to involuntary turnover even in manufacturing. The evidence therefore suggests that on net employers seeking flexibility in labor tend to use flexible work practices, contingent work, and turnover as complements, while only in manufacturing is there some evidence of substitutability between internal job flexibility and external job churning.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8111.

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Date of creation: Feb 2001
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Publication status: published as Neumark, David, and Peter Cappelli. “External Job Churning and Internal Job Flexibility." Industrial Relations (January 2004): 148-82.
Handle: RePEc:nbr:nberwo:8111

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Cited by:
  1. Larisa Smirnykh & Andreas Wörgötter, 2013. "Why do Russian Firms Use Fixed-Term and Agency Work Contracts?," OECD Economics Department Working Papers 1014, OECD Publishing.
  2. Zhang, Xuelin & Morissette, Rene, 2001. "Which Firms Have High Job Vacancy Rates in Canada?," Analytical Studies Branch Research Paper Series 2001176e, Statistics Canada, Analytical Studies Branch.
  3. Peter Cappelli, 2002. "Why Do Employers Pay For College?," NBER Working Papers 9225, National Bureau of Economic Research, Inc.
  4. Elisabetta Magnani & David Prentice, 2010. "Outsourcing And Unionization: A Tale Of Misallocated (Resistance) Resources," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 460-482, 04.
  5. Anne Delarue & Stijn Gryp & Geert Van Hootegem, 2006. "The quest for a balanced manpower capacity: different flexibility strategies examined," Enterprise and Work Innovation Studies, Universidade Nova de Lisboa, IET/CESNOVA-Research on Enterprise and Work Innovation, Faculty of Science and Technology, Universidade Nova de Lisboa, IET/CESNOVA-Research on Enterprise and Work Innovation, Faculty of Science and Technology, vol. 2(2), pages 69-86, November.
  6. Rosa, Julio & Morissette, Rene, 2003. "Alternative Work Practices and Quit Rates: Methodological Issues and Empirical Evidence for Canada," Analytical Studies Branch Research Paper Series 2003199e, Statistics Canada, Analytical Studies Branch.
  7. Pierre, Gaelle & Scarpetta, Stefano, 2004. "Employment regulations through the eyes of employers - do they matter and how do firms respond to them?," Policy Research Working Paper Series 3463, The World Bank.
  8. Susan Helper & Morris M. Kleiner, 2007. "International Differences in Lean Production, Productivity and Employee Attitudes," NBER Working Papers 13015, National Bureau of Economic Research, Inc.
  9. Zhang, Xuelin & Morissette, Rene, 2001. "Quelles entreprises ont des taux de vacance eleves au Canada?," Direction des etudes analytiques : documents de recherche 2001176f, Statistics Canada, Direction des etudes analytiques.
  10. Marie Leclair & Sébastien Roux, 2008. "Relative Productivity and the Use of Short-Term Jobs in Companies," Economie et Statistique, Institut National de la Statistique et des Etudes Economiques, Institut National de la Statistique et des Etudes Economiques, vol. 405, pages 47-76, February.
  11. Boockmann, Bernhard & Steffes, Susanne, 2007. "Seniority and Job Stability: A Quantile Regression Approach Using Matched Employer-Employee Data," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 07-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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