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Labour Turnover, Wage Structure, and Natural Unemployment

  • Schlicht, Ekkehart

A firm may reduce its turnover and the entailed turnover costs by raising wages. A rise in unemployment reduces turnover and turnover costs in a similar way. The interaction of these effects leads – in presence of perfectly flexible wages – to a stable equilibrium in the labor market which clears the market but accidentally. Unemployment increases with increases in labor mobility. Wage differentials arise between perfectly identical workers working in different firms that face different turnover costs.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 1255.

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Date of creation: 1978
Date of revision:
Publication status: Published in Journal of Institutional and Theoretical Economics (Zeitschrift für die gesamte Staatswissenschaft) 2 134(1978): pp. 337-364
Handle: RePEc:lmu:muenar:1255
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