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External Job Churning and Internal Job Flexibility

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  • Peter Cappelli
  • David Neumark

Abstract

Concern about job instability and insecurity has a long history and has generated a considerable body of research across the social sciences, most recently focused on whether job stability and security have declined. Internally flexible systems for organizing work, sometimes called 'functionally flexible' systems, have been proposed as arrangements that can reduce job instability and insecurity by reducing the need for firms to rely on job cuts or contingent work to be able to respond to changes in their environments. Related arguments have been made with regard to contingent work - that it allows firms to adjust labor while 'buffering' their core of permanent workers from instability. We examine these arguments using three measures of instability and insecurity - voluntary and involuntary turnover and the use of contingent work - drawn from a national probability sample of establishments. We find evidence that internally flexible work systems are associated with reduced voluntary and involuntary turnover in manufacturing. But in the rest of the economy and indeed overall, they tend to be positively associated with all three measures. Further, the use of contingent work is, in fact, positively related to involuntary turnover even in manufacturing. The evidence therefore suggests that on net employers seeking flexibility in labor tend to use flexible work practices, contingent work, and turnover as complements, while only in manufacturing is there some evidence of substitutability between internal job flexibility and external job churning.

Suggested Citation

  • Peter Cappelli & David Neumark, 2001. "External Job Churning and Internal Job Flexibility," NBER Working Papers 8111, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8111
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    References listed on IDEAS

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    Cited by:

    1. Peter Huber & Kristin Smeral, 2006. "Measuring worker flows," Applied Economics, Taylor & Francis Journals, vol. 38(14), pages 1689-1695.
    2. Smirnykh, Larisa & Wörgötter, Andreas, 2013. "Why Do Russian Firms Use Fixed-Term and Agency Work Contracts?," IZA Policy Papers 54, Institute for the Study of Labor (IZA).
    3. Pierre, Gaelle & Scarpetta, Stefano, 2004. "Employment regulations through the eyes of employers - do they matter and how do firms respond to them?," Policy Research Working Paper Series 3463, The World Bank.
    4. Susan Helper & Morris M. Kleiner, 2009. "International Differences in Lean Production, Productivity, and Employee Attitudes," NBER Chapters,in: International Differences in the Business Practices and Productivity of Firms, pages 231-261 National Bureau of Economic Research, Inc.
    5. Morissette, Rene & Zhang, Xuelin, 2001. "Quelles entreprises ont des taux de vacance eleves au Canada?," Direction des etudes analytiques : documents de recherche 2001176f, Statistics Canada, Direction des etudes analytiques.
    6. Byoung-Hoon Lee & Jung-Min Nam, 2013. "What drives Korean firms to downsize under the global financial crisis?," Asia Pacific Business Review, Taylor & Francis Journals, vol. 19(2), pages 171-185, April.
    7. Elisabetta Magnani & David Prentice, 2010. "Outsourcing And Unionization: A Tale Of Misallocated (Resistance) Resources," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 460-482, April.
    8. Cristini, Annalisa & Origo, Federica & Pinoli, Sara, 2017. "The healthy fright of losing a good one for a bad one," Journal of Economic Psychology, Elsevier, vol. 59(C), pages 129-144.
    9. Morissette, Rene & Zhang, Xuelin, 2001. "Which Firms Have High Job Vacancy Rates in Canada?," Analytical Studies Branch Research Paper Series 2001176e, Statistics Canada, Analytical Studies Branch.
    10. Peter Cappelli, 2002. "Why Do Employers Pay For College?," NBER Working Papers 9225, National Bureau of Economic Research, Inc.
    11. Marie Leclair & Sébastien Roux, 2007. "Productivité relative et utilisation des emplois de courte durée dans les entreprises," Économie et Statistique, Programme National Persée, vol. 405(1), pages 47-76.
    12. Morissette, Rene & Rosa, Julio, 2003. "Alternative Work Practices and Quit Rates: Methodological Issues and Empirical Evidence for Canada," Analytical Studies Branch Research Paper Series 2003199e, Statistics Canada, Analytical Studies Branch.
    13. Anne Delarue & Stijn Gryp & Geert Van Hootegem, 2006. "The quest for a balanced manpower capacity: different flexibility strategies examined," Enterprise and Work Innovation Studies, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology, vol. 2(2), pages 69-86, November.
    14. Boockmann, Bernhard & Steffes, Susanne, 2007. "Seniority and Job Stability: A Quantile Regression Approach Using Matched Employer-Employee Data," ZEW Discussion Papers 07-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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