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How Costly Is Turnover? Evidence from Retail

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  • Peter Kuhn
  • Lizi Yu

Abstract

We estimate turnover costs in small retail sales teams using daily sales data and an advance notice requirement to address endogeneity concerns. In addition to short-staffing and onboarding costs, we identify two less familiar sources of turnover costs: incumbent workers’ recruitment activities and reductions in team morale after a departure is announced. Our estimates of total turnover costs are relatively modest, however: 10% higher turnover is about as costly as a 0.6% wage increase. We attribute these low costs to a set of complementary personnel policies that ensure that only 25% of departures result in a short-staffing spell.

Suggested Citation

  • Peter Kuhn & Lizi Yu, 2021. "How Costly Is Turnover? Evidence from Retail," Journal of Labor Economics, University of Chicago Press, vol. 39(2), pages 461-496.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/710359
    DOI: 10.1086/710359
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    Cited by:

    1. Hoey, Sam & Peeters, Thomas & van Ours, Jan C., 2023. "The impact of absent co-workers on productivity in teams," Labour Economics, Elsevier, vol. 83(C).
    2. Guido Friebel & Matthias Heinz & Mitchell Hoffman & Nick Zubanov, 2023. "What Do Employee Referral Programs Do? Measuring the Direct and Overall Effects of a Management Practice," Journal of Political Economy, University of Chicago Press, vol. 131(3), pages 633-686.
    3. Nikolova, Milena, 2024. "Loud or Quiet Quitting? The Influence of Work Orientations on Effort and Turnover," IZA Discussion Papers 16960, Institute of Labor Economics (IZA).
    4. Timpe, Brenden, 2024. "The labor market impacts of America’s first paid maternity leave policy," Journal of Public Economics, Elsevier, vol. 231(C).
    5. Dan A. Black & Lars Skipper & Jeffrey A. Smith & Jeffrey Andrew Smith, 2023. "Firm Training," CESifo Working Paper Series 10268, CESifo.
    6. Zubanov, Nick & Shakina, Elena, 2023. "Performance Costs and Benefits of Collective Turnover: A Theory-Driven Measurement Framework and Applications," IZA Discussion Papers 16413, Institute of Labor Economics (IZA).
    7. Kai Fischer, 2023. "Skilled Labour Migration and Firm Performance: Evidence from English Hospitals and Brexit," CESifo Working Paper Series 10747, CESifo.
    8. Kuhn, Peter J. & Yu, Lizi, 2021. "Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams," IZA Discussion Papers 14115, Institute of Labor Economics (IZA).

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