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Title: An Economic Analysis of Quit Behavior: A Case Study of Young U.S. Males
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Chapman, Bruce James |
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An Economic Analysis of Quit Behavior: A Case Study of Young U.S. Males Ph.D. Dissertation, Yale University, 1982. DAI-A 43/12, p. 3996, June 1983 Cohort(s): Young Men Publisher: UMI - University Microfilms, Bell and Howell Information and Learning Keyword(s): Discrimination, Racial/Ethnic; Endogeneity; Job Turnover; Labor Turnover; Quits; Racial Differences; Wage Levels This dissertation investigates theoretically and empirically the economic determinants of voluntary labor turnover. A model is developed that incorporates aspects of both search and human capital theory. The predictions of this framework are tested and confirmed in general with the use of the U.S. National Longitudinal Survey of Young Men. The model assumes that workers attempt to improve lifetime earnings through job change, and will do so in response to stochastic changes in demand. These changes have implications for both wage levels and job opportunities. A major constraint to quitting is seen to be the existence of worker-financed firm specific human capital. These investments are not transferable and thus job change is more expensive the greater the opportunity cost of foregone returns. Perhaps the most important contribution of the thesis lies in the empirical analysis. Estimates of the worker's wage relative to the mean of his alternative distribution are derived through the use of residuals from an earnings function. It is demonstrated that this is a more appropriate test than the use of wage, the conventionally utilised variable. Further, approximations of worker-financed firm specific training outlays are computed through estimations of wage growth as a consequence of job specific tenure. A feature of this approach is the use of a two-stage least squares procedure treating tenure as an endogenous variable in the wage equation. The results suggest that ordinary least squares estimations misrepresent the relationship between tenure and wages. The quit estimations reveal that workers had higher probabilities of separation the lower was wage relative to the mean of the alternative wage distribution, the lower was age, the lower was firm specific tenure, the lower was specific training, if they did not belong to unions, if they were healthy and if they were white. This last finding is of interest given that it provides weak evidence for the existence of racial discrimination. This follows if blacks have higher expected durations of unemployment given a quit. Several issues remain unresolved from the exercise. First, local unemployment rates appear not to matter as quit determinants, a finding at variance with time series studies. Second, it is not possible to distinguish the major search hypothesis of the model from an identical prediction from job mismatch theory. |
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Bibliography Citation
Chapman, Bruce James. An Economic Analysis of Quit Behavior: A Case Study of Young U.S. Males. Ph.D. Dissertation, Yale University, 1982. DAI-A 43/12, p. 3996, June 1983. |