USF St. Petersburg campus Faculty Publications
Distortions and policies when labor turnover is costly.
Document Type
Article
Publication Date
1993
ISSN
0932-4569
Abstract
This paper uses a turnover model of efficiency wages that explicitly considers the microfoundations of the worker's choice to stay or quit. Here, there are two distortions. Employment and productivity are both too low to be optimal. Productivity is too low because turnover is too high. With a government budget constraint, policies that alleviate one distortion must aggravate the other. The results show that increasing productivity improves welfare even though it also leads to greater unemployment. Policies that increase productivity are wage- rate subsidies, hiring taxes, and minimum wage laws.
Publisher
Mohr Siebeck GmbH & Co. KG
Recommended Citation
Carter, T. J. (1993). Distortions and policies when labor turnover is costly. Journal of Institutional and Theoretical Economics (JITE), 149, 547-558.
Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Comments
Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.