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Hiring Risky Workers: Some Evidence

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  • Simon Burgess
  • Julia Lane
  • David Stevens

Abstract

Lazear recently suggested that firms that do not expect to live for a long time will hire only safe workers. Hence their worker turnover will be lower. In this paper we test this hypothesis using both the industry growth rate and industry‐average age of establishments as measures of the horizon for a particular firm. We find mixed results, both at the industry level and at the establishment level. Establishments in growing industries do indeed exhibit higher churning flows, but a high average age of establishments reduces rather than increases churning.

Suggested Citation

  • Simon Burgess & Julia Lane & David Stevens, 1998. "Hiring Risky Workers: Some Evidence," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(4), pages 669-676, December.
    • Handle: RePEc:bla:jemstr:v:7:y:1998:i:4:p:669-676
    DOI: 10.1111/j.1430-9134.1998.00669.x
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    References listed on IDEAS

    as
    1. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    2. Edward P. Lazear, 1995. "Hiring Risky Workers," NBER Working Papers 5334, National Bureau of Economic Research, Inc.
    3. Burgess, Simon & Lane, Julia & Stevens, David, 2000. "Job Flows, Worker Flows, and Churning," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 473-502, July.
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    Cited by:

    1. W.H.J. Hassink & G. Russo, 2003. "Wage Differences between Incumbents and External Candidates," Working Papers 03-03, Utrecht School of Economics.
    2. Piekkola, Hannu, 2000. "Unobserved Human Capital and Firm-Size Premium," Discussion Papers 739, The Research Institute of the Finnish Economy.
    3. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    4. Florian L. Kutzner & Daniel Read & Neil Stewart & Gordon Brown, 2017. "Choosing the Devil You Don’t Know: Evidence for Limited Sensitivity to Sample Size–Based Uncertainty When It Offers an Advantage," Management Science, INFORMS, vol. 63(5), pages 1519-1528, May.

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