IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper

Why Do Worker-Firm Matches Dissolve?

  • Gielen, Anne C.

    ()

    (Erasmus University Rotterdam)

  • van Ours, Jan C.

    ()

    (Tilburg University)

In a dynamic labor market worker-firm matches dissolve frequently causing workers to separate and firms to look for replacements. A separation may be initiated by the worker (a quit) or the firm (a layoff), or may result from a joint decision. A dissolution of a worker-firm match may be inefficient if it can be prevented by wage renegotiation. In this paper we study worker separations in the Dutch labor market. From an analysis of matched worker-firm data we conclude that both quits and layoffs are less likely to occur in high quality matches. We also find that workers with a high propensity to quit are offered higher wages to prevent them to quit. Similarly, workers with a high layoff probability give up some of their wage to prevent them from being laid-off. Despite these wage renegotiations some inefficiency in separations remains. However, there is a clear difference between quits and layoffs. Whereas inefficient quits are rare, inefficient layoffs occur frequently. These phenomena may be related to downward wage rigidity. While it is easy to renegotiate higher wages to prevent quits, it is much more difficult to renegotiate lower wages to prevent layoffs even if that would overall be beneficial to the workers involved.

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.

File URL: http://ftp.iza.org/dp2165.pdf
Download Restriction: no

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2165.

as
in new window

Length: 40 pages
Date of creation: Jun 2006
Date of revision:
Publication status: published as 'Layoffs, quits and wage negotiations' in: Economics Letters, 2010, 109 (2), 108-111
Handle: RePEc:iza:izadps:dp2165
Contact details of provider: Postal:
IZA, P.O. Box 7240, D-53072 Bonn, Germany

Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information: Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Blanchflower, David G, 1991. "Fear, Unemployment and Pay Flexibility," Economic Journal, Royal Economic Society, vol. 101(406), pages 483-96, May.
  2. Robert E. Hall, 2005. "Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market," NBER Working Papers 11183, National Bureau of Economic Research, Inc.
  3. Joseph G. Altonji & Robert A. Shakotko, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 437-459.
  4. Garcia Perez, Jose Ignacio & Rebollo Sanz, Yolanda, 2005. "Wage changes through job mobility in Europe: A multinomial endogenous switching approach," Labour Economics, Elsevier, vol. 12(4), pages 531-555, August.
  5. Daniel Parent, 1995. "Matching, Human Capital, and the Covariance Structure of Earnings," CIRANO Working Papers 95s-25, CIRANO.
  6. Parsons, Donald O, 1972. "Specific Human Capital: An Application to Quit Rates and Layoff Rates," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1120-43, Nov.-Dec..
  7. Hamermesh, Daniel S, 1988. "Plant Closings and the Value of the Firm," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 580-86, November.
  8. Haltiwanger, John C. & Vodopivec, Milan, 2002. "Worker Flows, Job Flows and Firm Wage Policies: An Analysis of Slovenia," IZA Discussion Papers 569, Institute for the Study of Labor (IZA).
  9. Gielen, Anne & van Ours, Jan C, 2005. "Age-Specific Cyclical Effects in Job Reallocation and Labour Mobility," CEPR Discussion Papers 5161, C.E.P.R. Discussion Papers.
  10. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  11. Edward P. Lazear, 1984. "Raids and Offermatching," NBER Working Papers 1419, National Bureau of Economic Research, Inc.
  12. Borland, Jeff, 1987. "The Demand for Australian Rules Football," The Economic Record, The Economic Society of Australia, vol. 63(182), pages 220-30, September.
  13. Robert E. Hall & Edward P. Lazear, 1982. "The Excess Sensitivity of Layoffs and Quits to Demand," NBER Working Papers 0864, National Bureau of Economic Research, Inc.
  14. Jeff Borland & Jenny Lye, 1996. "Matching and Mobility in the Market for Australian Rules Football Coaches," ILR Review, Cornell University, ILR School, vol. 50(1), pages 143-158, October.
  15. Marcela Perticara, . "Wage Mobility Through Job Mobility," ILADES-Georgetown University Working Papers inv141, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  16. Anabela Carneiro & Pedro Portugal, 2003. "Wages and the Risk of Displacement," Working Papers w200310, Banco de Portugal, Economics and Research Department.
  17. Farber, Henry S., 1999. "Mobility and stability: The dynamics of job change in labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 37, pages 2439-2483 Elsevier.
  18. Garen, John E, 1989. "Job-Match Quality as an Error Component and the Wage-Tenure Profile: A Comparison and Test of Alternative Estimators," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(2), pages 245-52, April.
  19. Garey Ramey & Joel Watson, 1997. "Contractual Fragility, Job Destruction, and Business Cycles," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 873-911.
  20. Dustmann, Christian & Pereira, Sonia C., 2005. "Wage Growth and Job Mobility in the U.K. and Germany," IZA Discussion Papers 1586, Institute for the Study of Labor (IZA).
  21. Gerard A. Pfann, 2006. "Downsizing and Heterogeneous Firing Costs," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 158-170, February.
  22. McLaughlin, Kenneth J, 1991. "A Theory of Quits and Layoffs with Efficient Turnover," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 1-29, February.
  23. Masanori Hashimoto & Ben T. Yu, 1980. "Specific Capital, Employmemt Contracts, and Wage Rigidity," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 536-549, Autumn.
  24. Galizzi, Monica & Lang, Kevin, 1998. "Relative Wages, Wage Growth, and Quit Behavior," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 367-91, April.
  25. Malcomson, J., 1998. "Individual employment contracts," Discussion Paper Series In Economics And Econometrics 9804, Economics Division, School of Social Sciences, University of Southampton.
  26. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
  27. Dale-Olsen, Harald, 2006. "Wages, fringe benefits and worker turnover," Labour Economics, Elsevier, vol. 13(1), pages 87-105, February.
  28. Robert Shimer, 2005. "Discussion of Robert E. Hall's REStat Lecture "Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market"," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 408-410, August.
  29. Mortensen, Dale T, 1988. "Wages, Separations, and Job Tenure: On-the-Job Specific Training or Matching?," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 445-71, October.
  30. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  31. John Haltiwanger & Milan Vodopivec, 2003. "Worker flows, job flows and firm wage policies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(2), pages 253-290, June.
  32. Bishop, John H, 1990. "Job Performance, Turnover, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 8(3), pages 363-86, July.
  33. John Haltiwanger, 1982. "Asymmetric Information, Long Term Labor Contracts, Inefficient Job Separations," UCLA Economics Working Papers 276, UCLA Department of Economics.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2165. 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: (Mark Fallak)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.