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

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

Working Hours Flexibility and Older Workers' Labor Supply

This paper studies the presence of hours constraints on the UK labor market and its effect on older workers labor supply, both at the extensive and the intensive margin. Using panel data for the period 1991-2004, the results from a competing risks model show that over-employed male workers can freely reduce working hours with their current employer prior to full retirement. However, some over-employed women are observed to leave the labor market early due to hours constraints. Despite the fact that hours constraints may shorten working lives of older women, this paper presents some explorative results which illustrate that increasing working hours flexibility does not seem to increase older workers total labor supply as is often suggested.

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.