Between the dockyard and the deep blue sea—Retention and personnel economics in the Royal Navy

This paper tackles various issues in personnel economics using the career profiles of British naval officers during the late 19th and early 20th centuries. Specifically we ask how pay, promotions, positions, and peers affect worker retention. Random variation in task assignments and job promotions allows us to explore factors that causally impact retention of personnel. We develop a number of key insights: (i) increases in pay raises retention; (ii) promotions influence retention more than money alone; (iii) many experiences in the Navy involve “firm-specific” human capital; (iv) modern/technical positions can threaten retention; and (v) job exits can be contagious. These results collectively indicate that rigid but technologically progressive organizations may face higher losses of human capital. Unless they enhance promotion opportunities and reorganize certain tasks, skilled personnel will leave.