Two-Sided Learning, Labor Turnover and Worker Displacement

45 Pages Posted: 23 Jun 2001

See all articles by Gerard A. Pfann

Gerard A. Pfann

Maastricht University; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Daniel S. Hamermesh

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: June 2001

Abstract

We construct a general dynamic structural model of two-sided learning between a firm and its workers. We estimate an empirical version of the model using personnel data from Fokker Aircraft that cover the path of layoffs and quits through its bankruptcy. We find that the firm learns about its workers' loyalty (demonstrating the role of information in repeated cooperative principal-agent relationships). There is no evidence that workers learn (consistent with earlier empirical results on American workers). The type of data that we use also generates information on the value of learning and on whether and how the characteristics of workers who remain until the firm's death differ from those of all affected workers. It thus allows us to measure the increases in the firm's value from learning about its workers' behavior and to infer the extent of biases in estimated losses from displacement from samples restricted to displaced workers.

JEL Classification: J33, J63

Suggested Citation

Pfann, Gerard Antonie and Hamermesh, Daniel S., Two-Sided Learning, Labor Turnover and Worker Displacement (June 2001). Available at SSRN: https://ssrn.com/abstract=273039 or http://dx.doi.org/10.2139/ssrn.273039

Gerard Antonie Pfann (Contact Author)

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31-43-388 3832 (Phone)
+31-43-388 4856 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Daniel S. Hamermesh

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States
512-475-8526 (Phone)
512-471-3510 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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