Firm performance and labour turnover: Evidence from the 2004 workplace employee relations survey
We explore the impact of labour turnover on firm performance by analysing the predictions of an extension of the efficiency wage model of [Salop, S., (1979) 'A Model of the Natural Rate of Unemployment', American Economic Review, 69, 117-125.] developed by [Garino, G. and Martin, C., (2008) 'The Impact of Labour Turnover: Theory and Evidence from UK Micro Data', Quantitative and Qualitative Analysis in the Social Sciences, 1(3), 81-104.], which separates incumbent and newly hired workers in the production function. Within this theoretical framework, an exogenous increase in the turnover rate can increase profits if firms do not choose wages unilaterally. We test the theoretical predictions of the model using UK cross-section establishment-level data, the 2004 Workplace and Employee Relations Survey. In accordance with our theoretical priors, the empirical results support the standard inverse relationship between the quit rate and firm performance where firms unilaterally choose the wage and generally support a positive relationship between firm performance and the quit rate where trade unions influence wage setting.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark B. Stewart, 2004.
"Semi-nonparametric estimation of extended ordered probit models,"
StataCorp LP, vol. 4(1), pages 27-39, March.
- Mark Stewart, 2002. "Semi-nonparametric estimation of extended ordered probit models," United Kingdom Stata Users' Group Meetings 2003 04, Stata Users Group.
- Hamermesh, Daniel S & Pfann, Gerard A, 1996. "Turnover and the Dynamics of Labour Demand," Economica, London School of Economics and Political Science, vol. 63(251), pages 359-367, August.
- Daniel S. Hamermesh & Gerard Pfann, 1992. "Turnover and the Dynamics of Labor Demand," NBER Working Papers 4204, National Bureau of Economic Research, Inc.
- Kersley, Barbara & Martin, Christopher, 1997. "Productivity Growth, Participation and Communication," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(5), pages 485-501, November.
- Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-125, March.
- Burgess, Simon M & Dolado, Juan J, 1989. "Intertemporal Rules with Variable Speed of Adjustment: An Application to U.K. Manufacturing Employment," Economic Journal, Royal Economic Society, vol. 99(396), pages 347-365, June.
- Glenda Quintini & Sébastien Martin, 2006. "Starting Well or Losing their Way?: The Position of Youth in the Labour Market in OECD Countries," OECD Social, Employment and Migration Working Papers 39, OECD Publishing.
- Alex Bryson & John Forth & Simon Kirby, 2005. "High-Involvement Management Practices, Trade Union Representation And Workplace Performance In Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(3), pages 451-491, 07.
- Richard Williams, 2006. "Generalized ordered logit/partial proportional odds models for ordinal dependent variables," Stata Journal, StataCorp LP, vol. 6(1), pages 58-82, March. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:26:y:2009:i:3:p:689-695. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.