Worker churning and firms' wage policies
Purpose – The purpose of this paper is to provide empirical evidence of a causal nature about the relationship between wages and churning (“excessive” worker turnover). Design/methodology/approach – Matched employer-employee panel data from Portugal, covering the period 1986-2000 are used in the study. Econometric methods are also used, including random effects tobit models, fixed effects and instrumental variables. Findings – Unlike in previous research (which typically does not consider causal relationships), the paper presents evidence that wages do not necessarily decrease the amount of churning. If employers are forced to increase pay, they may respond by hiring different workers. Detailed evidence about the nature of job and worker flows and churning levels across industries is presented. Research limitations/implications – Future research should examine the paths of workers whose wages are affected by collective bargaining. Practical implications – The paper provides additional evidence that effort may not be particularly sensitive to wages in some industries/occupations. The should be a better understanding of role of wages in personnel policies. Originality/value – This paper is probably the first that seeks to examine the causal relationship between wages and churning. The results will be of interest to labour economists and human resource management experts.
Volume (Year): 29 (2008)
Issue (Month): 1 (May)
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References listed on IDEAS
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- Ana Rute Cardoso & Pedro Portugal, 2005. "Contractual Wages and the Wage Cushion under Different Bargaining Settings," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 875-902, October.
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Labor and Demography
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"Social Preferences and the Response to Incentives: Evidence from Personnel Data,"
The Quarterly Journal of Economics,
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Other publications TiSEM
1f3fab1f-b02a-485a-bb8f-f, Tilburg University, School of Economics and Management.
- Daniel S. Hamermesh & Wolter H. J. Hassink & Jan C. Van Ours, 1996. "Job Turnover and Labor Turnover: A taxinomy of Employment Dynamics," Annals of Economics and Statistics, GENES, issue 41-42, pages 21-40.
- David E. Guest & Jonathan Michie & Neil Conway & Maura Sheehan, 2003. "Human Resource Management and Corporate Performance in the UK," British Journal of Industrial Relations, London School of Economics, vol. 41(2), pages 291-314, 06.
- Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
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