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Labour Turnover and Labour Productivity in a Retail Organization

Author

Listed:
  • Siebert, W. Stanley

    (University of Birmingham)

  • Zubanov, Nick

    (University of Konstanz)

  • Chevalier, Arnaud

    (Royal Holloway, University of London)

  • Viitanen, Tarja

    (University of Otago)

Abstract

We study the impact of labour turnover on labour productivity using a panel dataset of 347 shops belonging to a large UK clothing retailer over1995-1999. For the within-shop link – holding constant the shop’s permanent characteristics – we observe an inverted U-shape effect of labour turnover on productivity. The productivity-maximizing rates of FTE-adjusted quits and hires are each about 20% per year, improving productivity by 2.5% compared to the zero turnover level. We explain the difference between this optimal level of labour turnover and its observed average (quits and hires each around 10%) through the costs of hiring estimated at about £600 per hire. By contrast, between shops, there is a positive link between average rates of turnover and average productivity, suggesting that an unobservable management quality factor generates both high turnover and productivity, which we discuss.

Suggested Citation

  • Siebert, W. Stanley & Zubanov, Nick & Chevalier, Arnaud & Viitanen, Tarja, 2006. "Labour Turnover and Labour Productivity in a Retail Organization," IZA Discussion Papers 2322, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2322
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    Cited by:

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    2. Demyen Suzana & Milos Laura Raisa, 2015. "Productivity, Technical Equipment And Sales. Empirical Evidence From The Romanian Companies," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 360-368, December.
    3. Elena Grinza, 2016. "Replacing Workers: Is It a Boon or a Bane for Firm Productivity?," Working papers 034, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.

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    More about this item

    Keywords

    matched employee-firm panel data; retailing; labour turnover; labour productivity;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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