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Employment Bonuses and Labor Turnover

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  • Blakemore, Arthur E
  • Low, Stuart A
  • Ormiston, Michael B

Abstract

The purpose of this paper is to illustrate how a t wo-part compensation system composed of a rigid base salary and a fle xible bonus can reduce turnover. It is shown that bonus pay is an eff ective retention device if it is risk reducing and is correlated with outside contract offers. For the first time, to the best of the auth ors' knowledge, a model of bonus payments is tested with U.S. instead of Japanese data. The empirical results are suggestive of the condit ions that give bonuses an important, even dominant, role in worker re tention. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Blakemore, Arthur E & Low, Stuart A & Ormiston, Michael B, 1987. "Employment Bonuses and Labor Turnover," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 124-135, October.
    • Handle: RePEc:ucp:jlabec:v:5:y:1987:i:4:p:s124-35
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    Cited by:

    1. Bryson, Alex & Clark, Andrew E. & Freeman, Richard B. & Green, Colin P., 2016. "Share capitalism and worker wellbeing," Labour Economics, Elsevier, vol. 42(C), pages 151-158.
    2. Victor Y. Haines III & Patrice Jalette & Karine Larose, 2010. "The Influence of Human Resource Management Practices on Employee Voluntary Turnover Rates in the Canadian Non Governmental Sector," ILR Review, Cornell University, ILR School, vol. 63(2), pages 228-246, January.
    3. Lawrence Kaufmann, 1997. "A Model of Spillovers Through Labor Recruitment," International Economic Journal, Taylor & Francis Journals, vol. 11(3), pages 13-33.
    4. Justin Joffrion & Nathan Wozny, 2015. "Military Retention Incentives: Evidence from the Air Force Selective Reenlistment Bonus," Upjohn Working Papers 15-226, W.E. Upjohn Institute for Employment Research.
    5. Ekinci, Emre, 2019. "Discretionary bonuses and turnover," Labour Economics, Elsevier, vol. 60(C), pages 30-49.
    6. Campbell, Benjamin A., 2003. "Local Labor Market Conditions and Stock Options Incidence: A Study of the Information Technology Sector," Institute for Research on Labor and Employment, Working Paper Series qt7266d0q3, Institute of Industrial Relations, UC Berkeley.
    7. Tore Ellingsen & Eirik Gaard Kristiansen, 2022. "Fair and Square: A Retention Model of Managerial Compensation," Management Science, INFORMS, vol. 68(5), pages 3604-3624, May.

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