Declining Labor Turnover and Turbulence
Posted: 8 Aug 2015
There are 4 versions of this paper
Declining Labor Turnover and Turbulence
Declining Labor Turnover and Turbulence
Declining Labor Turnover and Turbulence
Date Written: July 2015
Abstract
The purpose of this paper is to identify possible sources of the secular decline in the job separation rate over the past four decades. I use a simple labor matching model with two types of workers, experienced and inexperienced, where the former type faces a risk of skill loss during unemployment. When the skill loss occurs, the worker is required to restart his career and thus suffers a drop in his wage. I show that a higher risk of skill loss results in a lower separation rate. The key mechanism is that the experienced workers accept lower wages in exchange for keeping their jobs.
Keywords: Separation Rate, Wage Loss, Turbulence
JEL Classification: E24, J31, J64
Suggested Citation: Suggested Citation