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Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers

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Author Info
Jeremy T. Fox (University of Chicago and NBER)

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Abstract

I estimate the relative magnitudes of worker switching costs and whether the employer switching of experienced engineers responds to outside wage offers. Institutional features imply that voluntary turnover dominates switching in the market for Swedish engineers from 1970–1990. I use data on the allocation of engineers across a large fraction of Swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming, discrete choice model of voluntary employer choice. The differentiated firms are modeled in employer characteristic space and each firm has its own age wage profile. I find that a majority of engineers have moderately high switching costs and that a minority of experienced workers are responsive to outside wage offers. Younger workers are more sensitive to outside wage offers than older workers.

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Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 1113.

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Date of creation: Jan 2009
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Handle: RePEc:pri:indrel:1113

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Keywords: monopsony papers;

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  17. Shane M. Greenstein, 1993. "Did Installed Base Given an Incumbent Any (Measurable) Advantages in Federal Computer Procurement?," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 19-39, Spring. [Downloadable!] (restricted)
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