Repeated Job Quits: Stepping stones or learning about quality?

Despite the fact that worker quits are often associated with wage gains and higheroverall job satisfaction, many workers quit once again within one or two years afterchanging jobs initially. Such repeated job quit behavior may arise as a steppingstone to better quality jobs (Burdett, 1978) or as a response to unexpectedly lowjob quality (Jovanovic, 1979).This paper tests the validity of both explanations using data from the UK labormarket in order to improve our understanding of job search behavior. Results frompanel estimations of job quits and job satisfaction illustrate that the labor market ischaracterized by elements of both explanations. More specifically, a variancedecomposition shows that the stepping stone model explains 80 percent ofrepeated job quit behavior; the remaining 20 percent is the result of learning aboutjob quality. Hence, workers appear to need several job quits to find their mostpreferred job and multiple job quits serve as a stepping stone to more satisfaction atwork.education, training and the labour market;

Repeated Job Quits: Stepping Stones or Learning about Quality?

Despite the fact that worker quits are often associated with wage gains and higher overall job satisfaction, many workers quit once again within one or two years after changing jobs initially. Such repeated job quit behavior may arise as a stepping stone to better quality jobs (Burdett, 1978) or as a response to unexpectedly low job quality (Jovanovic, 1979). This paper tests the validity of both explanations using data from the UK labor market in order to improve our understanding of job search behavior. Results from panel estimations of job quits and job satisfaction illustrate that the labor market is characterized by elements of both explanations. More specifically, a variance decomposition shows that the stepping stone model explains 80 percent of repeated job quit behavior; the remaining 20 percent is the result of learning about job quality. Hence, workers appear to need several job quits to find their most preferred job and multiple job quits serve as a stepping stone to more satisfaction at work.labor mobility, job satisfaction, job search

Repeated Job Quits: Stepping stones or learning about quality?

Abstract Increasing labor mobility is high on the political agenda because of its supposedly positive eects on labor market functioning. However, little attention has been paid to information imperfections, and to what extent they limit potential eciency gains of labor mobility. When the quality of a new job oer is known ex ante, job quits serve as a stepping stone to better jobs. Yet, if job quality is only observed ex post, job quits may lead to worse matches. This paper argues that actual job quit behavior is characterized by a mixture of both, and investigates the relative empirical content of both extremes in quit decisions. A variance decomposition shows that for nearly 70% of job quits job quality was observed ex-ante; the remaining 30% was learned ex post. Hence, stimulating job mobility mostly improves labor market outcomes, though governments may aim to further reduce information imperfections in order to maximize the ecacy of labor policies

Social Support Shopping: Evidence from a Regression Discontinuity in Disability Insurance Reform

This paper examines how a change in the generosity of one social assistance program generates spillovers onto other social assistance programs. We exploit an age discontinuity in the stringency of the 1993 Dutch disability reforms to estimate the causal effect of exit from disability insurance (DI) on participation in other social assistance programs. We find strong evidence of "social support shopping": 43 percent of those induced to leave DI due to the reform receive an alternative form of social assistance two years after the implementation of the reform. As a result, for each Euro saved in DI benefits, the government has to spend an extra 60 cents in other social assistance programs. This crowd-out rate grows from 60% to 69% if we also take into account the response of the partners’ of those affected by the DI reform. The crowd-out effect declines over time, but is still 25% eight years after the reform.crowd-out, spillover effects, social insurance, income assistance, welfare, regression discontinuity, administrative data

Unhappiness and Job Finding

It is puzzling that people feel quite unhappy when they become unemployed, while at the same time active labor market policies are needed to bring unemployed back to work more quickly. Using data from the German Socio-Economic Panel, we investigate whether there is indeed such a puzzle. First, we find that nearly half of the unemployed do not experience a drop in happiness, which might explain why at least some workers need to be activated. In addition to that, we find that even though unemployed who experience a drop in happiness search more actively for a job, it does not speed up their job finding. Apparently, there is no link between unhappiness and the speed of job finding. Hence, there is no contradiction between unemployed being unhappy and the need for activation policies.