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Wage Growth and the Theory of Turnover

Listed author(s):
  • Munasinghe, Lalith

Theories of turnover and wage dynamics have studied the impact of wage levels on turnover, but they have failed explicitly to model the role of wage growth in predicting turnover. This article presents a theory of turnover that explains why within-job wage growth reduces the likelihood of worker-firm separations. The model determines the evolution of value among jobs that differ systematically in permanent rates of wage growth and shows that the value of high wage-growth jobs increases faster. With additional assumptions about the search process, this proposition implies that high wage-growth jobs are less likely to end. Copyright 2000 by University of Chicago Press.

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File URL: http://dx.doi.org/10.1086/209956
File Function: full text
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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 18 (2000)
Issue (Month): 2 (April)
Pages: 204-220

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Handle: RePEc:ucp:jlabec:v:18:y:2000:i:2:p:204-20
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  1. Parent, Daniel, 2002. "Matching, human capital, and the covariance structure of earnings," Labour Economics, Elsevier, vol. 9(3), pages 375-404, July.
  2. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
  3. George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Wage Policy of a Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 921-955.
  4. George A. Akerlof & Lawrence F. Katz, 1989. "Workers' Trust Funds and the Logic of Wage Profiles," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 525-536.
  5. Weiss, Yoram, 1971. "Learning by doing and occupational specialization," Journal of Economic Theory, Elsevier, vol. 3(2), pages 189-198, June.
  6. Daniel Parent, 1995. "Matching, Human Capital, and the Covariance Structure of Earnings," Working Papers 730, Princeton University, Department of Economics, Industrial Relations Section..
  7. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-176, February.
  8. James M. Malcomson, 1997. "Contracts, Hold-Up, and Labor Markets," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1916-1957, December.
  9. Robert H. Topel & Michael P. Ward, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 439-479.
  10. repec:fth:prinin:351 is not listed on IDEAS
  11. Joanne Salop & Steven Salop, 1976. "Self-Selection and Turnover in the Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 619-627.
  12. Dale T. Mortensen, 1978. "Specific Capital and Labor Turnover," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 572-586, Autumn.
  13. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
  14. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Joanne Salop & Steven C. Salop, 1976. "Self-selection and turnover in the labor market," Special Studies Papers 80, Board of Governors of the Federal Reserve System (U.S.).
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