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

Performance Pay, Training and Labor Mobility

Market imperfections may cause firms and workers to under-invest in specific training. This paper shows that profit sharing may be a suitable instrument to enhance specific training investments, either by enhancing wage °exibility or by increasing the returns to training. As a result, profit sharing not only increases productivity by means of an effort effect, but also by increased training investments. Furthermore, the results suggest that older workers' employability can be improved if a profit-related remuneration is paid.profit-related pay;training;labor productivity;labor mobility

Why do Worker-Firm Matches Dissolve?

In a dynamic labor market worker-firm matches dissolve frequently causing workers to separate and firms to look for replacements.A separation may be initiated by the worker (a quit) or the firm (a layoff), or may result from a joint decision.A dissolution of a worker-firm match may be ineffcient if it can be prevented by wage renegotiation.In this paper we study worker separations in the Dutch labor market.From an analysis of matched worker-firm data we conclude that both quits and layoffs are less likely to occur in high quality matches.We also find that workers with a high propensity to quit are offered higher wages to prevent them to quit.Similarly, workers with a high layoff probability give up some of their wage to prevent them from being laid-off.Despite these wage renegotiations some ineffciency in separations remains.However, there is a clear difference between quits and layoffs.Whereas ineffcient quits are rare ineffcient layoffs occur frequently.These phenomena may be related to downward wage rigidity.While it is easy to renegotiate higher wages to prevent quits it is much more difficult to renegotiate lower wages to prevent layoffs even if that would overall be beneficial to the workers involved.Separations;Quits;Layoffs;Matched worker-firm dataset

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.Happiness;Unemployment duration

Age-specific Cyclical Effects in Job Reallocation and Labor Mobility

We present an empirical analysis of job reallocation and labor mobility using matched worker-firm data for the Netherlands to investigate how firms adjust their workforce over the cycle.Our data cover the period 1993-2002.We find that cyclical adjustments of the workforce occur mainly through fluctuations in job creation for young and prime-age workers while for old workers they occur mainly through fluctuations in job destruction.Moreover, we find that business cycle fluctuations are used to rejuvenate the workforce. Workforce reductions are most harmful for old workers; for them the flow out of employment is a one-way street.job creation;job destruction;accessions;separations;matched worker-firm data

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

Performance Related Pay and Labor Productivity

This paper uses information from a panel of Dutch firms to investigate the labor productivity effects of performance related pay (PRP).We find that PRP increases labor productivity at the firm level with about 9%.labour productivity;performance related pay