Raising the Bar for Models of Turnover

33 Pages Posted: 23 May 2005

See all articles by Erwan Quintin

Erwan Quintin

Federal Reserve Bank of Dallas

John J. Stevens

Federal Reserve Board - Division of Research and Statistics

Date Written: April 2005

Abstract

It is well known that turnover rates fall with employee tenure and employer size. We document a new empirical fact about turnover: Among surviving employers, separation rates are positively related to industry-level exit rates, even after controlling for tenure and size. Specifically, in a dataset with over 13 million matched employee-employer observations for France, we find that, all else equal, a 1 percentage point increase in exit rates raises separation rates by 1/2 percentage point on average. Among current year hires, the average effect is twice as large. This relationship between exit rates and separation rates is robust to a host of data and statistical considerations. We review several standard models of worker turnover and argue that a model with firm-specific human capital accumulation most easily accounts for this new empirical fact.

Keywords: Firm survival, employee turnover, human capital

JEL Classification: J24, J31, J63

Suggested Citation

Quintin, Erwan and Stevens, John J., Raising the Bar for Models of Turnover (April 2005). FEDS Working Paper No. 2005-23, Available at SSRN: https://ssrn.com/abstract=727966 or http://dx.doi.org/10.2139/ssrn.727966

Erwan Quintin

Federal Reserve Bank of Dallas ( email )

PO Box 655906
Dallas, TX 75265-5906
United States

John J. Stevens (Contact Author)

Federal Reserve Board - Division of Research and Statistics ( email )

20th and C Streets, NW
Washington, DC 20551
United States

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