Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers

Jeremy Fox

No 15322, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: I estimate the relative magnitudes of worker switching costs and how much the employer switching of experienced engineers responds to outside wage offers. Institutional features imply that voluntary turnover dominates switching in the market for Swedish engineers from 1970--1990. I use data on the allocation of engineers across a large fraction of Swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming, discrete choice model of voluntary employer choice. The differentiated firms are modeled in employer characteristic space and each firm has its own age-wage profile. I find that a majority of engineers have moderately high switching costs and that a minority of experienced workers are responsive to outside wage offers. Younger workers are more sensitive to outside wage offers than older workers.

JEL-codes: J21 J23 J29 J31 J33 J42 J44 J61 J62 J63 L0 (search for similar items in EconPapers)
Date: 2009-09
New Economics Papers: this item is included in nep-dcm and nep-lab
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Citations: View citations in EconPapers (4)

Published as Jeremy T. Fox, 2010. "Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 357-412, 04.

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Working Paper: Estimating the Employer Switching Costs and Wage Responses of Forward-Looking Engineers (2009)
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