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Author: Jun, Tackseung
Resulting in 1 citation.
1. Jun, Tackseung
Munasinghe, Lalith Roshan
Does Wage Volatility Matter in Labor Markets? Theory and Evidence on Labor Mobility
Working Paper, Department of Economics, Barnard College, Columbia University, May 2004
Cohort(s): NLSY79
Publisher: Department of Economics, Columbia University
Keyword(s): Job Turnover; Minimum Wage; Mobility, Job; Modeling; Wage Dynamics; Wage Effects

Permission to reprint the abstract has not been received from the publisher.

We present theory and evidence on the effects of wage volatility on labor mobility. Our model of job turnover explicitly incorporates variance of within job wages by assuming that wages evolve as random walk processes. With the additional assumption that job changes entail "switching" costs, the key theoretical result is that the optimal threshold of turnover -- the minimum wage difference between outside and inside jobs necessary for a job change -- is positively related to wage volatility. Data from the National Longitudinal Surveys of Youth show that workers who hold more volatile jobs quit less frequently and get bigger wage gains when they do quit. These findings are consistent with the implications of our theoretical model.
Bibliography Citation
Jun, Tackseung and Lalith Roshan Munasinghe. "Does Wage Volatility Matter in Labor Markets? Theory and Evidence on Labor Mobility." Working Paper, Department of Economics, Barnard College, Columbia University, May 2004.