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Declining job security

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  • Robert G. Valletta

Abstract

Although common belief and recent evidence point to a decline in "job security," the academic literature to date has been noticeably silent regarding the behavioral underpinnings of declining job security. In this paper, I define job security in the context of implicit contracts designed to overcome incentive problems in the employment relationship. Contracts of this nature imply the possibility of inefficient separations in response to adverse shocks, and they generate predictions concerning the relationship between job security parameters-such as worker seniority, aggregate shocks, and sectoral economic conditions-and the probability of separations. To test these predictions, I use Panel Study of Income Dynamics (PSID) data for the period 1976-92, combined with tabulations from the March Current Populations Surveys (CPS) for the same (and earlier) years. I use these data to estimate binomial and multinomial models of job separation decisions. The results are consistent with a decline over time in the incentives to maintain existing employment relationships.

Suggested Citation

  • Robert G. Valletta, 1998. "Declining job security," Working Papers in Applied Economic Theory 98-02, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfap:98-02
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Leora Friedberg & Michael T. Owyang, 2004. "Explaining the evolution of pension structure and job tenure," Working Papers 2002-022, Federal Reserve Bank of St. Louis.
    2. Ghilarducci, Teresa & Reich, Michael, 1998. "Training and Pensions: Substitutes or Complements?," Institute for Research on Labor and Employment, Working Paper Series qt2xq878qt, Institute of Industrial Relations, UC Berkeley.
    3. Karabay, Bilgehan & McLaren, John, 2010. "Trade, offshoring, and the invisible handshake," Journal of International Economics, Elsevier, vol. 82(1), pages 26-34, September.
    4. Benjamin Artz & Ilker Kaya, 2014. "Job insecurity and job satisfaction in the United States: the case of public sector union workers," Industrial Relations Journal, Wiley Blackwell, vol. 45(2), pages 103-120, March.
    5. Cho, Joonmo, 2004. "Flexibility, instability and institutional insecurity in Korean labor market," Journal of Policy Modeling, Elsevier, vol. 26(3), pages 315-351, April.
    6. Luc Behaghel & Julie Moschion, 2011. "Skilled labor supply, IT-based technical change and job instability," PSE Working Papers halshs-00646595, HAL.
    7. Andrea Bassanini & Thomas Breda & Eve Caroli & Antoine Rebérioux, 2010. "Working in family firms: less paid but more secure? Evidence from French matched employer-employee data," PSE Working Papers halshs-00564972, HAL.
    8. Luciano Fanti, 2011. "When an efficient bargaining is more “efficient†than a competitive labour market," Discussion Papers 2011/131, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Susan N. Houseman & Anne E. Polivka, 1999. "The Implications of Flexible Staffing Arrangements for Job Stability," Upjohn Working Papers and Journal Articles 99-56, W.E. Upjohn Institute for Employment Research.
    10. Yolanda Kodrzycki, 2007. "Using unexpected recalls to examine the long-term earnings effects of job displacement," Working Papers 07-2, Federal Reserve Bank of Boston.
    11. Eve Caroli, 2007. "Internal versus External labour flexibility: The role of knowledge codification," Working Papers halshs-00588315, HAL.
    12. Borland, J. & McDonald, J.T., 2000. "Displaced workers in Australia 1984-1996: Macroeconomic Conditions and Structural Change," Papers 2000-10, Tasmania - Department of Economics.
    13. Pedro S. Amaral, 2003. "Turbulence, Heterogeneity, and Wage Earnings Inequality," Macroeconomics 0309016, EconWPA.
    14. Luc Behaghel & Julie Moschion, 2011. "Skilled labor supply, IT-based technical change and job instability," Working Papers halshs-00646595, HAL.
    15. Thomas C. Buchmueller & John Dinardo & Robert G. Valletta, 2002. "Union Effects on Health Insurance Provision and Coverage in the United States," ILR Review, Cornell University, ILR School, vol. 55(4), pages 610-627, July.
    16. Patrick Francois & Joanne Roberts, 2003. "Contracting Productivity Growth," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 59-85.
    17. repec:dau:papers:123456789/7247 is not listed on IDEAS
    18. Neumark, David & Reed, Deborah, 2004. "Employment relationships in the new economy," Labour Economics, Elsevier, vol. 11(1), pages 1-31, February.
    19. Jahn, Elke J. & Wagner, Thomas, 2008. "Job Security as an Endogenous Job Characteristic," Working Papers 08-6, University of Aarhus, Aarhus School of Business, Department of Economics.
    20. Robert G. Valletta, 1998. "Changes in the structure and duration of U.S. unemployment, 1967-1998," Economic Review, Federal Reserve Bank of San Francisco, pages 29-40.
    21. repec:pri:cepsud:172farber is not listed on IDEAS
    22. Henry S. Farber, 2010. "Job Loss and the Decline in Job Security in the United States," NBER Chapters,in: Labor in the New Economy, pages 223-262 National Bureau of Economic Research, Inc.
    23. Erica Groshen & David Levine, 1998. "The rise and decline(?) of U.S. internal labor markets," Research Paper 9819, Federal Reserve Bank of New York.
    24. repec:pri:cepsud:171farber is not listed on IDEAS
    25. Daniel Aaronson & Daniel G. Sullivan, 1998. "The decline of job security in the 1990s: displacement, anxiety, and their effect on wage growth," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 17-43.

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