Labour Turnover, Wage Structure, and Natural Unemployment

Ekkehart Schlicht ()

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: A firm may reduce its turnover and the entailed turnover costs by raising wages. A rise in unemployment reduces turnover and turnover costs in a similar way. The interaction of these effects leads – in presence of perfectly flexible wages – to a stable equilibrium in the labor market which clears the market but accidentally. Unemployment increases with increases in labor mobility. Wage differentials arise between perfectly identical workers working in different firms that face different turnover costs.

Keywords: efficiency wages; Solow-condition; turnover (search for similar items in EconPapers)
JEL-codes: J41 J31 J6 (search for similar items in EconPapers)
Date: 1978
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