Job Satisfaction and Employee Turnover: A Firm-Level Perspective

27 Pages Posted: 4 Sep 2015

Abstract

In this paper, I study an employment situation where the employer and the employees cooperate about the implementation of a job satisfaction survey. Cooperation is valuable because it improves the firm's ability to predict employee quits, but it is only an equilibrium outcome because the employer-employee relation is repeated and long-term. Using a unique combination of firm-level data and information from job satisfaction surveys, the empirical analysis reveals that the cooperation reduces the firm's employee turnover costs significantly by improving its ability to predict quits. This cost reduction may easily exceed the cost of conducting the survey. The analysis also reveals that the firm is willing to sacrifice profits in a given year to be able to sustain the cooperative relationship with the employees.

Keywords: quits, job satisfaction, cooperation, retention

JEL Classification: M5

Suggested Citation

Frederiksen, Anders, Job Satisfaction and Employee Turnover: A Firm-Level Perspective. IZA Discussion Paper No. 9296. Available at SSRN: https://ssrn.com/abstract=2655336

Anders Frederiksen (Contact Author)

IZA Institute of Labor Economics ( email )

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

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