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Worker churning and firms' wage policies

Worker churning and firms' wage policies Purpose – The purpose of this paper is to provide empirical evidence of a causal nature about the relationship between wages and churning (“excessive” worker turnover). Design/methodology/approach – Matched employer‐employee panel data from Portugal, covering the period 1986‐2000 are used in the study. Econometric methods are also used, including random effects tobit models, fixed effects and instrumental variables. Findings – Unlike in previous research (which typically does not consider causal relationships), the paper presents evidence that wages do not necessarily decrease the amount of churning. If employers are forced to increase pay, they may respond by hiring different workers. Detailed evidence about the nature of job and worker flows and churning levels across industries is presented. Research limitations/implications – Future research should examine the paths of workers whose wages are affected by collective bargaining. Practical implications – The paper provides additional evidence that effort may not be particularly sensitive to wages in some industries/occupations. The should be a better understanding of role of wages in personnel policies. Originality/value – This paper is probably the first that seeks to examine the causal relationship between wages and churning. The results will be of interest to labour economists and human resource management experts. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Worker churning and firms' wage policies

Pedro S. Martins
International Journal of Manpower , Volume 29 (1): 16 – Mar 21, 2008
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References (22)

Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
0143-7720
DOI
10.1108/01437720810862001
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to provide empirical evidence of a causal nature about the relationship between wages and churning (“excessive” worker turnover). Design/methodology/approach – Matched employer‐employee panel data from Portugal, covering the period 1986‐2000 are used in the study. Econometric methods are also used, including random effects tobit models, fixed effects and instrumental variables. Findings – Unlike in previous research (which typically does not consider causal relationships), the paper presents evidence that wages do not necessarily decrease the amount of churning. If employers are forced to increase pay, they may respond by hiring different workers. Detailed evidence about the nature of job and worker flows and churning levels across industries is presented. Research limitations/implications – Future research should examine the paths of workers whose wages are affected by collective bargaining. Practical implications – The paper provides additional evidence that effort may not be particularly sensitive to wages in some industries/occupations. The should be a better understanding of role of wages in personnel policies. Originality/value – This paper is probably the first that seeks to examine the causal relationship between wages and churning. The results will be of interest to labour economists and human resource management experts.

Journal

International Journal of Manpower – Emerald Publishing

Published: Mar 21, 2008

Keywords: Employee turnover; Pay policies; Portugal

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