Wages, employment, labour turnover and the accessibility of local labour markets

Philip S. Morrison; Kerry L. Papps; Jacques Poot

doi:10.1016/j.labeco.2004.10.007

Wages, employment, labour turnover and the accessibility of local labour markets

Philip S. Morrison
, Kerry L. Papps
, Jacques Poot^*

^*Corresponding author for this work

Spatial Economics

Research output: Contribution to Journal › Article › Academic › peer-review

Abstract

In this paper, we extend a dynamic efficiency wage model to the case of multiple local labour markets that interact through migration. Firms are concerned about turnover costs. The quitting behaviour of workers is a function of local labour market conditions, non-wage income and the costs and benefits of migration to other local labour markets. A synthetic micro sample of 20,302 observations from the 1986, 1991 and 1996 New Zealand Censuses of Population and Dwellings provides evidence supporting the theory. Across subgroups, the wages of workers with relatively inelastic local labour supply and/or lower geographical mobility are relatively more responsive to changes in the local employment rate. The evidence is consistent with the notion that local employers engage in monopsonistic competition with respect to the employment of such workers.

Original language	English
Pages (from-to)	639-663
Number of pages	25
Journal	Labour Economics
Volume	13
Issue number	5
DOIs	https://doi.org/10.1016/j.labeco.2004.10.007
Publication status	Published - 1 Oct 2006

Funding

This research was supported by VUW Faculty of Commerce and Administration Grant 7008054 and by financial assistance from the New Zealand Department of Labour with the purchase of data. We are grateful for several thoughtful comments from two anonymous referees, which assisted us in revising the paper. Appendix A

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Keywords

Earnings functions
Migration
Quitting behaviour
Turnover costs
Unemployment

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10.1016/j.labeco.2004.10.007

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N2 - In this paper, we extend a dynamic efficiency wage model to the case of multiple local labour markets that interact through migration. Firms are concerned about turnover costs. The quitting behaviour of workers is a function of local labour market conditions, non-wage income and the costs and benefits of migration to other local labour markets. A synthetic micro sample of 20,302 observations from the 1986, 1991 and 1996 New Zealand Censuses of Population and Dwellings provides evidence supporting the theory. Across subgroups, the wages of workers with relatively inelastic local labour supply and/or lower geographical mobility are relatively more responsive to changes in the local employment rate. The evidence is consistent with the notion that local employers engage in monopsonistic competition with respect to the employment of such workers.

AB - In this paper, we extend a dynamic efficiency wage model to the case of multiple local labour markets that interact through migration. Firms are concerned about turnover costs. The quitting behaviour of workers is a function of local labour market conditions, non-wage income and the costs and benefits of migration to other local labour markets. A synthetic micro sample of 20,302 observations from the 1986, 1991 and 1996 New Zealand Censuses of Population and Dwellings provides evidence supporting the theory. Across subgroups, the wages of workers with relatively inelastic local labour supply and/or lower geographical mobility are relatively more responsive to changes in the local employment rate. The evidence is consistent with the notion that local employers engage in monopsonistic competition with respect to the employment of such workers.

KW - Earnings functions

KW - Migration

KW - Quitting behaviour

KW - Turnover costs

KW - Unemployment

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Wages, employment, labour turnover and the accessibility of local labour markets

Abstract

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UN SDGs

Keywords

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