Managerial turnover and worker turnover

José Alfaro () and Josep Tribó

DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de Economía de la Empresa

Abstract: We study the influence of the manager's degree of consolidation within the firm over the firm's labor policy. We argue that non-consolidated (recently-appointed) managers are more worried about short-term results than consolidated managers are. This feature leads the former to bias the labor contracting favoring short-term contracts. This has two main consequences. First, a higher variation in the number of workers hired in each period. And second, a lower increase in unitary labor costs. To contrast these results, we use a database of 1.054 Spanish companies during the period (1994-98), and analyze their managerial turnover as well as their corresponding variation in the number of workers and in unitary labor costs. The theoretical results are confirmed, especially for highly-productive R and D-intensive firms.

Date: 2001-06
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