Job security and employee well-being: Evidence from matched survey and register data

We examine the effects of establishment- and industry-level labor market turnover on employees' well-being. The linked employer-employee panel data contain both survey information on employees' subjective well-being and comprehensive register-based information on job and worker flows. We test for the existence of compensating wage differentials by explaining wages and job satisfaction with average uncertainties, measured by an indicator for a high excessive turnover (churning) rate. The results are consistent with the theory of compensating wage differentials, since high uncertainty increases real wages, but high uncertainty has no effect on job satisfaction while not controlling for wages.     

Job mobility and careers in firms

This paper presents a theoretical model that combines employers learning about worker productivity, human capital acquisition, job-assignment and resolution of worker uncertainty regarding disutility of work from a job, to show how widely documented findings on both wage and promotion dynamics and turnover can be captured in a single set-up. Specifically we show how our model can capture results such as; probability of turnover decreases with labor market experience, wage changes during job changes is more in earlier periods, serial correlation in wages and probability of promotion increases in wages, amongst others.     

Quit behavior and the role of job protection

Job protection reduces job turnover by changing firms' hiring and firing decisions. Yet the effect of job protection on workers' quit decisions and post-quit outcomes is still unknown. We present the first evidence using individual panel data from 12 European countries, which differ both in worker turnover rates and in the level of job protection. We find that workers are less likely to quit their job in countries with more job protection, and those workers who quit receive higher wages compared to stayers. This evidence can be explained by increased mobility costs associated with higher expected risk of post-quit layoff and job mismatch.     

Minimum wages and employment in Swedish hotels and restaurants

This paper considers the effects of union-bargained minimum wages on transitions into and out of employment in the hotels and catering industry over the period 1979–99. This industry is characterised by a high fraction of unskilled labour input, high worker turnover and binding minimum wages. The empirical approach identifies workers affected by real minimum wage increases and decreases, respectively. Job separations and accessions for the treatment groups are then contrasted to the outcomes for control groups, with wages marginally above those of the treatment groups. Unlike previous studies, this paper also considers same-period transitions for same-wage workers who are unaffected by minimum wage changes. This procedure should help to control for unobserved differences between high- and low-wage workers and is made possible by the diversified minimum wage structure of the industry. According to the results, job separations tend to increase with rising minimum wages (except for teenagers during 1993–98). The evidence regarding accessions is less conclusive.     

Ranking of job applicants,on-the-job search,and persistent unemployment

We formulate an efficiency wage model with on-the-job search where wages depend on turnover and employers may use information on whether the searching worker is employed or unemployed as a hiring criterion. We show theoretically that such ranking of job applicants by employment status raises both the level and the persistence of unemployment and numerically that the effects may be substantial. More prevalent ranking in Europe compared to the US (because of more rigid wage structures, etc.) could potentially help to explain the high and persistent unemployment in Europe.     

Amenities and Fringe Benefits: Omitted Variable Bias

ABSTRACT If labor is fairly mobile, as it is in the United States, one would expect that households would move from less desirable areas toward more desirable areas until all areas are equally desirable. The way that areas become equally desirable is through the impact of movers on wages and rents (and possibly "endogenous" disamenities, such as congestion or pollution). That is, as people move to desirable areas, they will increase the demand for land (raising rents) and increase the supply of labor (lowering wages); in equilibrium, the wage and rent "compensation" for the niceness of an area reveals, in dollar terms, just how nice the area is. Blomquist, Berger, and Hoehn 1988 demonstrated the empirical importance of such amenity compensation in estimates of the "quality-of-life" in urban areas. However, those authors were unable to include fringe benefits, which are about 40 percent of explicit wage payments, in their wage compensation. This matters greatly as amenities are seen here to be even more important than previously thought and the regional implications are pronounced, with the West and Southeast looking "better" when fringe benefits are included and the East North Central and Northeast looking substantially "worse."     

Analysis of the practice of job evaluation in the metal industry in Turkey

Job evaluation's main aim is to establish a fair wage structure. Its main principle is ‘equal pay for equal work’. ‘Metal Industry Job Grouping System’ (MIDS) has been in the metal industry in Turkey for more than 20 years. The results of the practice of the system were measured by the Gini coefficient. By the findings, the average wages of the job groups are different enough from each other by their job groups in the way the wage of the bigger number job group is higher than the smaller except the job group two in the industry. However, the wages are far from the principle ‘equal wage for equal job’ within the same job itself. In addition, the workers make use of bonuses and social benefits. The effect of social benefits of them on the wage structure is positive within the same job group and negative between different job groups within the same company. Nevertheless, the effect of both bonuses and social benefits on the wage structure is negative between the companies because, between them they are different from each other. Job group and seniority affect the wage structure. Seniority has a socio-psychological self-producing dynamic. The distribution of seniorities within the same job group has negative effects on the wage structure. However, this fact for each worker disappears for the long term since the worker of today who has short-term seniority will be the one of tomorrow who has long-term seniority. Therefore, for each worker, the wage structure gets closer to the principle ‘equal wage for equal job’ within the same job group itself over time.     

Employee bonding and turnover efficiency

This study explores how bonding contracts improve employee attraction and retention. These bonds are payment schemes tied to employment duration, such as the vesting of pensions and stock options. This study presents an employee turnover model in which only the worker knows their taste for their current job. This taste gives the current employer monopsonistic power, resulting in deadweight loss from excessive turnover. Bonding contracts serve as a commitment device for future wages and eliminate such deadweight loss, but only when the roles of bondholders and wage setters are separate. Firms that do this are more competitive to new hires. This model offers several empirical findings regarding a variety of common bonding practices.     

The Turnover‐Reducing Effects of the Minimum Wage may Harm the Economy

This article surveys the literature on the effects of the minimum wage and argues that the observed reduction in turnover rates is not necessarily desirable. If a curvilinear relationship exists between firm productivity and turnover, the effects of the minimum wage on reducing turnover may create a distance between the actual turnover rate and the optimal rate. Consequently, even if we accept the proposition that minimum wages have little impact on employment, they may reduce productivity or job growth in sectors not directly affected by the minimum wage.     

Labour market oligopsonistic competition: The effect of worker immobility on wages

We suggest that firms in a local labour market may be able to exploit worker mobility costs and offer immobile workers wages that are lower than their marginal product. If so, the ability of employers to exploit worker immobility in setting wages would decline in the competitiveness of the local labour market. We test this intuition using a measure of individual mobility costs and measures of local labour market competition. Our findings suggest that worker immobility causes substantial wage variation across workers in small, weakly competitive markets, and in occupations where wages are individually bargained.     

The effect of search frictions on wages

We aim to test whether the degree of informational search frictions in the labor market has a negative effect on wages. In a range of equilibrium search models of the labor market, this effect is predicted to be negative. Nevertheless, this has never been tested. We perform tests with matched worker–firm data. The worker data are informative on individual wages and labor market transitions, and this allows for estimation of the degree of search frictions. The firm data are informative on labor productivity. This allows us to investigate how the mean difference between labor productivity and wages in a market depends on the degree of frictions and other determinants, and to assess the quantitative relevance of frictions for wages.     

Performance Pay and Offshoring

In this paper, we construct a North–South general equilibrium model of offshoring, highlighting the nexus among endogenous effort‐based labor productivity and the structure of wages. Offshoring is modeled as international transfer of management practices and production techniques that allow Northern firms to design and implement performance compensation contracts. Performance–pay contracts address moral hazard issues stemming from production uncertainty and unobserved worker effort. We find that worker effort augments productivity and compensation of those workers assigned to more offshorable tasks. An increase in worker effort in the South, caused by a decline in offshoring costs, an increase in worker skill, or a decline in production uncertainty in the South, increases the range of offshored tasks and makes workers in the North and South better off. An increase in Southern labor force increases the range of offshored tasks, benefits workers in the North, and hurts workers in the South. International labor migration from low‐wage South to high‐wage North shrinks the range of offshored tasks, makes Northern workers worse off and Southern workers (emigrants and those left behind) better off. Higher worker effort in the North, caused by higher worker skills or lower degree of production uncertainty, decreases the range of offshored tasks and benefits workers in the North and South.     

Managers and Wage Policies

Do individual top managers matter for wages and wage policies? Are there general differences in “style” among managers with respect to worker compensation? To shed light on these questions, we exploit a large panel dataset from Portugal that allows us to match workers, firms, and managers, and follow the movements of the latter across different firms over time. While accounting for the effect of worker and firm heterogeneity, we estimate the role of top manager fixed effects in determining wages and wage policies. The estimates suggest that (i) top managers have a significant influence on wages and wage policies; (ii) there exists different managerial “styles”; and (iii) managers’ (observable) attributes matter for worker compensation.     

The impacts of benefit plans on employee turnover: a firm-level analysis approach on Taiwanese manufacturing industry

Employee turnover is a serious problem and the question of how to retain highly talented and valued people is very important. Previous employee turnover studies were mostly focused on the individual level but rarely from the standpoint of the business or firm. This study examines the impacts of four kinds of benefit plans on firm-level employee turnover issues, namely, retirement fund, pension, severance pay and fringe benefit. The present study uses the Census Bureau Employment Movement Survey of the Directorate General of Budget, Accounting and Statistics in Taiwan. The two models used to examine the overall manufacturing industry were: (1) the inducement model which tests the ‘with or without’ effect; and (2) the investment model which tests the ‘the more the better’ effect. Results reveal that, with respect to the firm's employee turnover rate, retirement fund and fringe benefits are negative while severance plans are significantly positive. These results are consistent with the transaction costs theory that total expenditure on these plans to retain employees (bureaucratic cost) is less than the market arrangements (transaction cost). In addition, the impact of pension plans is negative in respect of employee turnover in larger or more highly educated firms, but positive in firms with a lower educational level. Moreover, the firm size is negative while the firm's average employees' educational level is positive with respect to the workforce leaving their jobs. These results are consistent with the perspective of resource-based theory and human capital theory. Incidentally, this study also reveals insignificant differences between the ‘with or without’ effect and the ‘the more the better’ effect existing as a sub-group industry rather than across the entire industry.     

Worker visibility and firms' retention policies

In the last two decades, the widespread use of web‐based social networks has led to a higher visibility of workers to the labor market. We theoretically and experimentally analyze the consequences of such increased labor market transparency for the efficiency of job assignments, the wages of workers, and firm profits. Our theoretical results show that higher visibility of workers increases the efficiency of job assignments, leads to a redistribution of income between workers of different ability, and increases overall surplus. Our experimental findings generally support the theoretical results with the exception that increased visibility leads to higher worker turnover such that surplus does not increase.     

劳动密集型企业一线员工流失的原因与对策

近几年来,人力资源的供给与需求之间的矛盾日益突出,特别是劳动密集型企业一线员工稳定性差,流动性大,且员工队伍参差不齐,低学历比重大,直接影响企业生产经营活动的正常进行,劳动密集型企业有必要构建员工与企业共享发展成果机制,强化对一线员工的培训与学历提升,建立转岗轮岗制度,实现工作丰富化,提供具有竞争性的工资福利待遇以增加对一线员工的吸引力,从而实现企业的可持续发展。     

Screening discrimination and the determinants of wages

This paper tests for a type of statistical discrimination, referred to as “screening discrimination,” that assumes signals of worker productivity that employers receive at the time of hiring are noisier for one group than for another. Screening discrimination implies that starting wages depend less on initial productivity signals for women than for men, and that the influence of worker performance on wages increases faster with tenure for women. I test these predictions and find strong evidence suggesting that employers receive less-accurate initial signals from women than from men, even when comparing men and women in the same job.     

Paying to queue: a theory of locational differences in nonunion wages

Traditional theories of the effect unions have on nonunion wages are difficult to reconcile with firm and worker mobility. We show how differences in nonunion wages can persist in a two-city search model. Nonunion wage differences across cities are driven by transition rates into the union sector. Should union queues form in the nonunion sector, union power decreases nonunion wages as workers are willing to take lower wages to line up for union jobs. However, if queues are formed in the unemployed sector, union power increases nonunion wages as nonunion firms pay premiums to induce workers to leave the queue.     

How do European firms adjust their labour costs when nominal wages are rigid?

Although workers' nominal wages are seldom cut, firms have multiple options available if they require adjustments in their wage bills. We broaden the analysis of relative (in)flexibility in labour costs by investigating the use of other margins of labour cost adjustment at the firm level beyond base wages. Using data from a unique survey, we find that European firms make extensive use of other components of compensation to adjust the cost of labour. Interestingly, firms facing base wage rigidity are more likely to use alternative margins of labour cost adjustment; therefore there appears to be some degree of substitutability between wage flexibility and the flexibility of other cost components. Changes in bonuses and non-pay benefits are some of the potential margins firms use to reduce costs. We also show how the margins of adjustment chosen are affected by unionisation and firm and worker characteristics.     

Worker poaching in a supply chain: Enemy from within?

Worker poaching represents the primary mode by which workers change employers. We examine worker poaching between firms linked in a value chain. We find that, in a value chain, the less productive firm may offer its workers higher wages and poach workers from the more productive firm. We also find that worker flows accomplished via poaching impact supply chain management: (a) the identity of the bottleneck firm may depend on whether poaching is available; (b) poaching between linked firms may benefit both, and (c) the value chain cannot be fully coordinated without controlling wages in the labor market.