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

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  • Jeremy T. Fox

    (University of Chicago and NBER)

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 to 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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Bibliographic Info

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:dsp010k225b06h

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Keywords: monopsony papers; Sweden; Swendish firms; wages; engineers;

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Cited by:
  1. Alan Manning, 2010. "Imperfect competition in the labour market," LSE Research Online Documents on Economics 28729, London School of Economics and Political Science, LSE Library.
  2. Ryan Monarch, 2014. ""It'S Not You, It'S Me": Breakups In U.S.-China Trade Relationships," Working Papers 14-08, Center for Economic Studies, U.S. Census Bureau.
  3. Orley C. Ashenfelter & Henry Farber & Michael R. Ransom, 2010. "Modern Models of Monopsony in Labor Markets: A Brief Survey," Working Papers 1223, Princeton University, Department of Economics, Industrial Relations Section..

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