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How Wage Compression Affects Job Turnover

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  • Fredrik Heyman

Abstract

I use Swedish establishment-level panel data to test Bertola and Rogerson’s (1997) hypothesis of a positive relation between the degree of wage compression and job reallocation. Results indicate that the effect of wage compression on job turnover is positive and significant in the manufacturing sector. The wage compression effect is stronger on job destruction than on job creation, consistent with downward wage rigidity. Further results include a strong positive relationship between the fraction of temporary employees and job turnover and a negative relationship between the amount of working-time flexibility and job reallocation.
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  • Fredrik Heyman, 2008. "How Wage Compression Affects Job Turnover," Journal of Labor Research, Springer, vol. 29(1), pages 11-26, March.
    • Handle: RePEc:spr:jlabre:v:29:y:2008:i:1:p:11-26
    DOI: 10.1007/s12122-007-9030-1
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    More about this item

    Keywords

    Job creation and job destruction; Wage dispersion; Temporary employment contracts; Panel data;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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