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Worker separations in a nonstationary corporate environment

Listed author(s):
  • Dohmen, Thomas J.
  • Pfann, Gerard A.

This paper investigates differences in worker turnover characteristics between periods of workforce expansion and contraction in a firm. We derive a Cox proportional hazard model from a simple model of job separation based on the expected surpluses from the firm and its workers. We account for non-stationarity in the baseline hazard reversing the role of calendar time and employment duration (Imbens (1994)), and estimate the model using personnel data from a large Dutch aircraft manufacturer over a period from January 1987 until March 14th, 1996, one day before its bankruptcy. Performance evaluations, blue versus white collar employment, and career paths within the firm are found to play an important role explaining differences in turnover behavior. A generally important result is that smooth functional forms of the age effect on worker mobility can produce misleading results, blurring a better understanding of the design of early retirement schemes for corporate reorganizations.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 48 (2004)
Issue (Month): 3 (June)
Pages: 645-663

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Handle: RePEc:eee:eecrev:v:48:y:2004:i:3:p:645-663
Contact details of provider: Web page: http://www.elsevier.com/locate/eer

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  1. Imbens, G W, 1994. "Transition Models in a Non-stationary Environment," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 703-720, November.
  2. Kuhn, Peter, 1988. "A Nonuniform Pricing Model of Union Wages and Employment," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 473-508, June.
  3. Dustmann, Christian & Meghir, Costas, 1999. "Wages, Experience and Seniority," CEPR Discussion Papers 2077, C.E.P.R. Discussion Papers.
  4. Hall, Robert E & Lazear, Edward P, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 233-257, April.
  5. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
  6. Macleod, W.B. & Malcomson, J.M., 1991. "Investments, Hold Up and the Reform of Market Contracts," Cahiers de recherche 9114, Universite de Montreal, Departement de sciences economiques.
  7. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
  8. Gautier, P.A. & van den Berg, G. & van Ours, J.C. & Ridder, G., 1999. "Separations at the Firm Level," Discussion Paper 1999-17, Tilburg University, Center for Economic Research.
  9. George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Wage Policy of a Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 921-955.
  10. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
  11. Pfann, Gerard A., 2001. "Options to quit," Economics Letters, Elsevier, vol. 70(2), pages 259-265, February.
  12. Farber, Henry S, 1994. "The Analysis of Interfirm Worker Mobility," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 554-593, October.
  13. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  14. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
  15. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  16. 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.
  17. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-1260, December.
  18. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
  19. Peter Kuhn & Jacques Robert, 1989. "Seniority and Distribution in a Two-Worker Trade Union," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 485-505.
  20. Prescott, Edward C & Visscher, Michael, 1980. "Organization Capital," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 446-461, June.
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