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Seniority, Sectoral Decline, and Employee Retention: An Analysis of Layoff Unemployment Spells

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  • Idson, Todd L
  • Valletta, Robert G

Abstract

The authors investigate the effect of tenure on employee retention under varying labor market conditions. Using a competing risks analysis of recall and new job acceptance applied to layoff unemployment spell data from waves fifteen and sixteen (1982-83) of the Panel Study of Income Dynamics, they find that adverse conditions (sectoral employment decline) significantly reduce the positive tenure effect on recall probabilities. This result is consistent with firm default on delayed payment contracts and does not appear to reflect the effect of technological change on the value of firm-specific investments. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Idson, Todd L & Valletta, Robert G, 1996. "Seniority, Sectoral Decline, and Employee Retention: An Analysis of Layoff Unemployment Spells," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 654-676, October.
  • Handle: RePEc:ucp:jlabec:v:14:y:1996:i:4:p:654-76
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    References listed on IDEAS

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    Cited by:

    1. Daniel Hallberg, 2011. "Economic Fluctuations and Retirement of Older Employees," LABOUR, CEIS, vol. 25(3), pages 287-307, September.
    2. Uwe Jirjahn & Jens Mohrenweiser & Uschi Backes‐Gellner, 2011. "Works Councils and Learning: On the Dynamic Dimension of Codetermination," Kyklos, Wiley Blackwell, vol. 64(3), pages 427-447, August.
    3. Bruce Fallick & Keunkwan Ryu, 2007. "The Recall and New Job Search of Laid-Off Workers: A Bivariate Proportional Hazard Model with Unobserved Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 313-323, May.
    4. Joseph A. Ritter & Lowell J. Taylor, 1998. "Seniority-based layoffs as an incentive device," Working Papers 1998-006, Federal Reserve Bank of St. Louis.
    5. Chen, Ming-Yuan, 2002. "Survival duration of plants: Evidence from the US petroleum refining industry," International Journal of Industrial Organization, Elsevier, vol. 20(4), pages 517-555, April.
    6. Patrick Francois & Joanne Roberts, 2003. "Contracting Productivity Growth," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 59-85.
    7. Valletta, Robert G, 1999. "Declining Job Security," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 170-197, October.
    8. Bayo-Moriones, Alberto & Galdon-Sanchez, Jose Enrique & Güell, Maia, 2004. "Is Seniority-Based Pay Used as a Motivation Device? Evidence from Plant Level Data," IZA Discussion Papers 1321, Institute for the Study of Labor (IZA).
    9. Uwe Jirjahn, 2010. "Nonunion Worker Representation and the Closure of Establishments: German Evidence on the Role of Moderating Factors," Research Papers in Economics 2010-01, University of Trier, Department of Economics.
    10. John S. Heywood & Uwe Jirjahn, 2016. "The hiring and employment of older workers in Germany: a comparative perspective
      [Die Beschäftigung und Neueinstellung älterer Arbeitnehmer in Deutschland: Eine vergleichende Perspektive]
      ," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(4), pages 349-366, December.
    11. Uwe Jirjahn, 2009. "The Introduction of Works Councils in German Establishments - Rent Seeking or Rent Protection?," British Journal of Industrial Relations, London School of Economics, vol. 47(3), pages 521-545, September.

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