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Job Satisfaction and Employee Turnover: A Firm-level Perspective

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  • Frederiksen, Anders

Abstract

In this paper, I study an employment situation where the employer and the employees cooperate about the implementation of a job satisfaction survey. Cooperation is valuable because it improves the firm's ability to predict employee quits, but it is only an equilibrium outcome because the employer-employee relation is repeated and long-term. Using a unique combination of firm-level data and information from job satisfaction surveys, the empirical analysis reveals that the cooperation reduces the firm's employee turnover costs significantly by improving its ability to predict quits. This cost reduction may easily exceed the cost of conducting the survey. The analysis also reveals that the firm is willing to sacrifice profits in a given year to be able to sustain the cooperative relationship with the employees.

Suggested Citation

  • Frederiksen, Anders, 2015. "Job Satisfaction and Employee Turnover: A Firm-level Perspective," CEI Working Paper Series 2015-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2015-4
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/28287/wp2015-4.pdf
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    References listed on IDEAS

    as
    1. David Card & Alexandre Mas & Enrico Moretti & Emmanuel Saez, 2012. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," American Economic Review, American Economic Association, vol. 102(6), pages 2981-3003, October.
    2. Frederiksen, Anders & Honore, Bo E. & Hu, Luojia, 2007. "Discrete time duration models with group-level heterogeneity," Journal of Econometrics, Elsevier, vol. 141(2), pages 1014-1043, December.
    3. Nachum Sicherman, 1996. "Gender Differences in Departures from a Large Firm," ILR Review, Cornell University, ILR School, vol. 49(3), pages 484-505, April.
    4. Frederiksen, Anders, 2008. "Gender differences in job separation rates and employment stability: New evidence from employer-employee data," Labour Economics, Elsevier, vol. 15(5), pages 915-937, October.
    5. Royalty, Anne Beeson, 1998. "Job-to-Job and Job-to-Nonemployment Turnover by Gender and Education Level," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 392-443, April.
    6. Weiss, Andrew, 1984. "Determinants of Quit Behavior," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 371-387, July.
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    Cited by:

    1. Anders Frederiksen & Lisa B. Kahn & Fabian Lange, 2020. "Supervisors and Performance Management Systems," Journal of Political Economy, University of Chicago Press, vol. 128(6), pages 2123-2187.
    2. Mitchell Hoffman & Steven Tadelis, 2021. "People Management Skills, Employee Attrition, and Manager Rewards: An Empirical Analysis," Journal of Political Economy, University of Chicago Press, vol. 129(1), pages 243-285.

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    More about this item

    Keywords

    quits; job satisfaction; cooperation; retention;
    All these keywords.

    JEL classification:

    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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    This paper has been announced in the following NEP Reports:

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