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Three Elements of Personnel Policy: Worker Flows, Retention and Pay

University of Aarhus CLS Working Paper No. 98-016

24 Pages Posted: 25 Aug 1999  

Paul Bingley

University of Aarhus - National Centre for Register-based Research

Niels Westergaard-Nielsen

Copenhagen Business School; IZA Institute of Labor Economics

Date Written: December 1998

Abstract

This paper describes how personnel policies vary between establishments with respect to pay, tenure and worker flows. In particular we have analysed to what extent higher pay is related to higher or lower turnover among the work force and more or less seniority. Can higher pay be considered a compensation for a higher turnover among the work force? If the workforce is more stable, can the employer pay less? Various theories have different predictions for the signs. Before we can answer these questions, we will have to control for observed and unobserved wage, turnover and tenure effects at the individual and the establishment level. According to observables there does not always exist a direct correspondence between high-paying, long-tenured and expanding establishments. However, correlating unobservable establishment effects, some clear patterns do emerge. Tenure is negatively related to all worker flows except separations and stays. More hires are correlated with higher wage levels and higher wage growth. Expanding establishments have better wage prospects. Finally, tenure and wage regressions indicate higher tenure is related to better pay but worse pay prospects. We find a positive relation between wage levels and wage growth.

JEL Classification: J3, J6, L1, L2

Suggested Citation

Bingley, Paul and Westergaard-Nielsen, Niels, Three Elements of Personnel Policy: Worker Flows, Retention and Pay (December 1998). University of Aarhus CLS Working Paper No. 98-016. Available at SSRN: https://ssrn.com/abstract=176048 or http://dx.doi.org/10.2139/ssrn.176048

Paul Bingley (Contact Author)

University of Aarhus - National Centre for Register-based Research ( email )

8000 Ã…rhus C, 8210
Denmark

Niels Westergaard-Nielsen

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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