Relative Wages, Wage Growth, and Quit Behavior
Using Italian Social Security records for male workers from a sample of firms in Turin from 1981 to 1983, the authors show that, conditional on the worker's own wage, the average wage in the establishment for similar workers is negatively related to quits. They also find that this variable predicts future wage growth. This is consistent with an economic model in which workers compare the long-run value of employment opportunities when making quit decisions. Copyright 1998 by University of Chicago Press.
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