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Decomposing the relationship between wage and churning

Author

Listed:
  • Richard Duhautois
  • Fabrice Gilles
  • Héloïse Petit

Abstract

Purpose - – Applied research shows higher wages are associated with lower mobility at the establishment level. A usual interpretation is that high pay decreases labour turnover. The purpose of this paper is to test if such relationship holds for every type of worker in every type of firm. Design/methodology/approach - – The analysis is based on a linked employer-employee panel dataset covering the French private sector from 2002 to 2005. The authors compute establishment wage effects and use them as explanatory variables in labour mobility equations (for churning rate and quit rate). Using spline regression models enables to investigate for potential non-linearities. Findings - – The authors show that the relationship between churning rate and wage is non-linear and has the shape of an inverted Practical implications - – A possible interpretation of our results is that paying higher wages may be an effective stabilizing tool especially for employers in small establishments and when starting wages are relatively low. Originality/value - – The paper is the first to decompose the relationship between wage and mobility. It shows the relationship differs across establishment size and is not linear. The paper also shows quits play a role in this relationship.

Suggested Citation

  • Richard Duhautois & Fabrice Gilles & Héloïse Petit, 2016. "Decomposing the relationship between wage and churning," International Journal of Manpower, Emerald Group Publishing, vol. 37(4), pages 660-683, July.
  • Handle: RePEc:eme:ijmpps:v:37:y:2016:i:4:p:660-683
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    References listed on IDEAS

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