Where the Grass is Greener: Voluntary Turnover and Wage Premiums

Posted: 19 Apr 2000

See all articles by Marlene Kim

Marlene Kim

University of Massachusetts Boston - Department of Economics

Abstract

Standard economic and compensation theories suggest that voluntary turnover should decline when a firm pays wages that are higher than those of its competitors. Turnover behavior in the State of California's Civil Service, however, does not support this prediction. Using a fixed effects estimator to control for job-specific characteristics, I find that the wages California pays relative to those of its competitors has little or no effect on turnover. In addition, estimates of the elasticity of turnover with respect to alternative wages indicate that higher wage rates do not pay for themselves through lower turnover costs. Instead, the absolute wage level and wage growth have large effects. In other words, it appears that workers are less likely to quit jobs that pay high wages and have larger wage increases, no matter how their wages compare to those paid by other employers.

JEL Classification: J31, J63

Suggested Citation

Kim, Marlene, Where the Grass is Greener: Voluntary Turnover and Wage Premiums. Available at SSRN: https://ssrn.com/abstract=194895

Marlene Kim (Contact Author)

University of Massachusetts Boston - Department of Economics ( email )

100 Morrissey Blvd.
Boston, MA 02125
617-287-6954 (Phone)
617-287-6976 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
550
PlumX Metrics