The Impact of Differences in Turnover Rates on Male/Female Pay Differentials

James F. Ragan and Sharon P. Smith

Journal of Human Resources, 1981, vol. 16, issue 3, 343-365

Abstract: Economic theory suggests that wages vary with turnover rates. Because of hiring and training costs, workers viewed as likely to quit can anticipate a wage discount. Workers in industries with high layoff rates may demand a compensating wage premium. By pooling time-series industry turnover rates, by sex, with 1970 Census data, we are able to examine the effect of past industry turnover on current earnings. Turnover proves to be important for both males and females, although the wage discount for a high quit probability is larger for females. When differences in turnover are taken into account, the portion of the male/female earnings gap "explainable" by human capital and socioeconomic variables increases by a factor of one-half.

Date: 1981
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