External Job Churning and Internal Job Flexibility

38 Pages Posted: 3 Feb 2001 Last revised: 20 Oct 2010

See all articles by Peter Cappelli

Peter Cappelli

University of Pennsylvania Wharton School - Center for Human Resources; National Bureau of Economic Research (NBER); University of Pennsylvania - Management Department

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: February 2001

Abstract

Concern about job instability and insecurity has a long history and has generated a considerable body of research across the social sciences, most recently focused on whether job stability and security have declined. Internally flexible systems for organizing work, sometimes called 'functionally flexible' systems, have been proposed as arrangements that can reduce job instability and insecurity by reducing the need for firms to rely on job cuts or contingent work to be able to respond to changes in their environments. Related arguments have been made with regard to contingent work - that it allows firms to adjust labor while 'buffering' their core of permanent workers from instability. We examine these arguments using three measures of instability and insecurity - voluntary and involuntary turnover and the use of contingent work - drawn from a national probability sample of establishments. We find evidence that internally flexible work systems are associated with reduced voluntary and involuntary turnover in manufacturing. But in the rest of the economy and indeed overall, they tend to be positively associated with all three measures. Further, the use of contingent work is, in fact, positively related to involuntary turnover even in manufacturing. The evidence therefore suggests that on net employers seeking flexibility in labor tend to use flexible work practices, contingent work, and turnover as complements, while only in manufacturing is there some evidence of substitutability between internal job flexibility and external job churning.

Suggested Citation

Cappelli, Peter and Neumark, David, External Job Churning and Internal Job Flexibility (February 2001). NBER Working Paper No. w8111. Available at SSRN: https://ssrn.com/abstract=258509

Peter Cappelli (Contact Author)

University of Pennsylvania Wharton School - Center for Human Resources ( email )

3733 Spruce Street, Vance Hall
Philadelphia, PA 19104-6358
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HOME PAGE: http://www.wharton.upenn.edu/faculty/cappelli.html

National Bureau of Economic Research (NBER)

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University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

David Neumark

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-824-8496 (Phone)
949-824-2182 (Fax)

HOME PAGE: http://www.socsci.uci.edu/~dneumark/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

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

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