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.     

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.     

Wages,fringe benefits and worker turnover

Linked employer–employee data from Norway are utilised to study how employers use wages and fringe benefits in managing their workforce. The analysis shows that on average across all establishments, we observe a positive correlation between wages and fringe benefits. This indicates the presence of labour market frictions and thus is not supportive of the classical frictionless hedonic wage model. Higher wages and more fringe benefits reduce the worker turnover rate. Fringe benefits have stronger negative impact on the excess worker turnover rate than indicated by the reported monetary value.     

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.     

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.     

An empirical analysis of state labor markets: has worker insecurity shifted wages in the 1990s?

Labor markets in the 1990s have tightened considerably but with a surprising lack of wage inflation. There are several explanations for this behavior, where one of the more prominent explanations is that worker insecurities have depressed wage growth. This study develops an augmented Phillips curve model to test whether there are any structural shifts in wage dynamics in the 1990s. Using state data from 1980 to 1996, the empirical results are consistent with wages becoming more cyclically responsive in the 1990s. Increased long-term unemployment and permanent job losses are associated with the depressed wages in the 1990s, supporting claims that worker insecurity has dampened wage growth.     

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.     

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.     

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.     

Labor Market Segmentation and Job-Related Risk

A bstract . Labor market segmentation theory calls into question the neoclassical theory of compensating wage differentials , which posits that workers are compensated for job-related risk. From the perspective of segmentation theory , one would expect secondary workers to experience greater risk on the job with less likelihood of compensation. An empirical examination of worker samples, using discriminant analysis to construct primary and secondary subsamples, reveals that the wages of primary workers vary directly with the probability of job related death, injury and disease. No such relationship holds for secondary workers , who are also shown to experience significantly higher levels of job related risk and disamenity than their primary counterparts.     

Wages,implicit contracts,and the business cycle: Evidence from a European panel

We study the joint behavior of hours and wages over the business cycle in a unique panel of 13 European countries, and document significant history dependence in wages. Workers who experience favorable market conditions during their tenure on the job have higher wages, and work fewer labor hours. Unobserved differences in productivity, such as varying job quality, or match-specific productivity are not likely to explain this variation. The results instead point to the importance of contractual arrangements in wage determination. In economies with decentralized bargaining practices, such arrangements resemble self-enforcing insurance contracts with one-sided commitment (by the employer). On the other hand, in countries with strong unions and centralized wage bargaining, wage behavior is better approximated by full-commitment insurance contracts. The co-movement of hours and wages further confirms a contractual framework with variable worker hours. Despite the strong prevalence of contracts in Europe, however, the elasticity of labor supply is considerably smaller compared to the U.S. labor market.     

A longitudinal analysis of search frictions and matching in the U.S. labor market

This paper takes a partial equilibrium on-the-job search model to a decade (1996–2006) of repeated cross-sections from the U.S. Current Population Survey. Each month, a set of parameters ruling worker mobility between labor market states and along the wage ladder is estimated using wage distributions and individual transitions. In particular, job-to-job mobility is decomposed into a voluntary component (on-the-job search) and an involuntary one (job reallocation). The resulting time series of transition parameters are first used in a longitudinal analysis of labor turnover and search frictions. Job reallocations are shown to be key in the acyclical behavior of the job separation rate, and in the procyclical behavior of the probability of changing job. Moreover, an index of search frictions is computed and shown to follow no cyclical pattern. The paper then turns to an estimation of the matching function with both unemployed and employed job seekers. The transition parameters from the job search model are used as weights in an aggregate indicator of labor supply. The inclusion of employed workers increases the estimates of the elasticities of the matching function with respect to its two inputs (labor supply and job vacancies).     

Promotion Signals,Experience, and Education

This paper uses a nation‐wide representative survey of employees to examine whether more informative job promotions carry larger wage increases. In job assignment models with asymmetric information, unexpected promotions send a signal to the external labor market to revise upward their assessment of a worker's ability. The employing firm must then increase wages to prevent the worker from being bid away. Less educated workers are assumed to come from a group with lower average ability. Their promotion is hypothesized to induce a larger positive update of the assessment of their ability than the promotion of more educated workers. Promotions of less experienced workers, with less known about their abilities, should also result in strong signaling effects. We obtain regression results consistent with our hypotheses, although the size and significance of the estimates hinge on the promotion definition. Inexperienced workers gain more from promotions that entail new managerial responsibilities, whereas less educated workers gain more from nonmanagerial promotions. This sensitivity to the definition of promotion suggests that promotions reveal information on different dimensions of ability for different types of workers.     

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.     

Wage equations,wage curves and all that

This paper is concerned with the relationship between wages and unemployment. Using UK regions and individuals as the basis for our analysis, the following questions are investigated. First, is the wage equation a relationship between unemployment and wages or wage changes? Second, can we identify the relationship completely by looking at regional wages and regional unemployment or do regional wages depend on aggregate unemployment as well? Third, can we identify an upward sloping cross-section relationship between wages and unemployment corresponding to a zero migration condition? Finally, are wages influenced only by the current state of the labour market or do contracts lead to wages depending on labour market conditions in the last boom or upon entry into the job?     

Estimating the shirking model with variable effort

We show in a theoretical efficiency wage model where firms differ in monitoring intensity that the impact of monitoring intensity on wages is ambiguous, a result that mirrors evidence from the empirical literature. We argue that to correctly specify the impact of monitoring on wages, the interaction between monitoring and effort needs to be modelled. Results using a worker, firm panel from Ghana which contains reasonable effort and monitoring proxies show that the return to effort is higher in poorly monitored sectors as the theory suggests.     

Bargaining and Wage Rigidity in a Matching Model for the US

This paper uses robust econometric methods to assess previous empirical results for the Mortensen and Pissarides ( 1994 ) matching model. Assuming all wages are negotiated each period is inconsistent with the history dependence in US wages, even allowing for heterogeneous match productivities, time to build vacancies and credible bargaining. Flexible wages for job changers, with rigid wages for job stayers, allows the model to capture this history dependence and is not inconsistent with parameter calibrations in the literature. Such wage rigidity affects only the timing of wage payments over the duration of matches; conclusions about other characteristics are unaffected by it.     

The effect of trade and FDI on inter-industry wage differentials: The case of Mexico

Taking advantage of the liberalization process under NAFTA, this paper assesses the relative importance of the degree of trade openness and Foreign Direct Investment (FDI) in explaining inter-industry wage differentials for the case of Mexico. Using INEGI's National Survey of Urban Employment for the period 1994–2004, the empirical analysis is conducted on two stages. In the first stage, individual wages are regressed on worker characteristics, job and firm attributes, informality and a set of federal entity and industry indicators. In the second stage, inter-industry wage differentials (derived from the coefficient estimates of the industry indicators) are regressed on trade and FDI variables. The main findings show that trade openness does not have a statistically significant effect on inter-industry wage differentials, whereas for the case of FDI, a positive nonlinear relationship is found to exist.     

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.     

Immigrant wage profiles within and between establishments

Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. Using linked employer–employee data, we show that 40% of the native–immigrant wage gap is explained by differential sorting across establishments. We find that returns to experience and seniority are similar for immigrant and native workers, but that differences in job mobility and intermittent spells of unemployment are major sources of disparity in lifetime wage growth. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. These empirical patterns are consistent with signaling disadvantages of immigrant job seekers, but not with the explanation that low wage growth follows from inferior information about employers and job opportunities.