Mobility and stability: The dynamics of job change in labor markets
In: Handbook of Labor Economics
Three central facts describe inter-firm worker mobility in modern labor markets: (1) long-term employment relationships are common; (2) most new jobs end early; and (3) the probability of a job ending declines with tenure. Models based on firm-specific capital provide a parsimonious explanation for these facts, but it also appears that worker heterogeneity in mobility rates can account for much of what we observe in these data. I investigate tests of the specific capital model and consider whether these tests are successful in distinguishing the specific capital model from a model based on heterogeneity. One approach uses longitudinal data with detailed mobility histories of workers. These analyses suggest that both heterogeneity and specific capital (implying true duration dependence in the hazard of job ending) appear to be significant factors in accounting for mobility patterns. A second approach is through estimation of the return to tenure in earnings functions. This is found to have several weaknesses including the endogeneity of tenure and the lack of tight theoretical links between tenure and accumulated specific capital and between productivity and wages. A third approach is to use data on the earnings experience of displaced workers. Several tests are derived based on these data, but there is generally an alternative heterogeneity-based explanation that makes interpretation difficult. Nonetheless, firms appear willing to pay to encourage long-term employment relationships, and they may do so because it is efficient to invest in their workforce. On this basis, I conclude that, while deriving convincing direct evidence for the specific capital model of mobility is difficult, it appears that specific capital is a useful construct for understanding worker mobility and wage dynamics
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|This chapter was published in: ||This item is provided by Elsevier in its series Handbook of Labor Economics with number
3-37.||Handle:|| RePEc:eee:labchp:3-37||Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description|
When requesting a correction, please mention this item's handle: RePEc:eee:labchp:3-37. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.