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Worker Separations in a Nonstationary Corporate Environment

Author Info

Listed author(s):
  • Dohmen, Thomas

    ()

    (University of Bonn)

  • Pfann, Gerard A.

    ()

    (Maastricht University)

Abstract

This paper investigates differences in worker turnover characteristics between periods of workforce expansion and contraction in a firm. We derive a Cox proportional hazard model from a simple model of job separation based on the expected surpluses from the firm and its workers. We account for non-stationarity in the baseline hazard reversing the role of calendar time and employment duration (Imbens (1994)), and estimate the model using personnel data from a large Dutch aircraft manufacturer over a period from January 1987 until March 14th, 1996, one day before its bankruptcy. Performance evaluations, blue versus white collar employment, and career paths within the firm are found to play an important role explaining differences in turnover behavior. A generally important result is that smooth functional forms of the age effect on worker mobility can produce misleading results, blurring a better understanding of the design of early retirement schemes for corporate reorganizations.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 201.

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Length: 88 pages
Date of creation: Sep 2000
Handle: RePEc:iza:izadps:dp201
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Keywords: personnel economics; Turnover;

Other versions of this item:

Find related papers by JEL classification:
  • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
  • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
  • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

References listed on IDEAS
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  1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
  2. Pfann, Gerard A., 2001. "Options to quit," Economics Letters, Elsevier, vol. 70(2), pages 259-265, February.
  3. Hall, Robert E & Lazear, Edward P, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 233-257, April.
  4. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
  5. Gautier, P.A. & van den Berg, G. & van Ours, J.C. & Ridder, G., 1999. "Separations at the firm level," Other publications TiSEM 0bc95b07-e6ff-4899-87a6-4, Tilburg University, School of Economics and Management.
  6. Christian Dustmann & Costas Meghir, 2005. "Wages, Experience and Seniority," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 77-108.
  7. Peter Kuhn & Jacques Robert, 1989. "Seniority and Distribution in a Two-Worker Trade Union," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 485-505.
  8. 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.
  9. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  10. Farber, Henry S, 1994. "The Analysis of Interfirm Worker Mobility," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 554-593, October.
  11. Kuhn, Peter, 1988. "A Nonuniform Pricing Model of Union Wages and Employment," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 473-508, June.
  12. Macleod, W.B. & Malcomson, J.M., 1991. "Investments, Hold Up and the Reform of Market Contracts," Cahiers de recherche 9114, Universite de Montreal, Departement de sciences economiques.
  13. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  14. Imbens, G W, 1994. "Transition Models in a Non-stationary Environment," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 703-720, November.
  15. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
  16. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
  17. Prescott, Edward C & Visscher, Michael, 1980. "Organization Capital," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 446-461, June.
  18. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
  19. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-1260, December.
  20. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
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