The Wage Effects of Voluntary Labor Mobility with and without Intervening Unemployment

Abstract

This study investigates how an unemployment spell between jobs affects a job-changer's new wages. One hypothesis holds that the search and mobility costs associated with unemployment between jobs are compensated for by increased wage gains resulting from more intensive job search; opposing hypotheses are that unemployed job changers are at a disadvantage because they have fewer job contacts than job changers who move directly from one job to another, or because they are unable to gain new skills or develop good work habits while unemployed. The results of this analysis of 1979–81 data from the National Longitudinal Survey of Young Men support the first hypothesis: an unemployment spell between jobs is associated with wage gains higher than those obtained when the job change was made with no intervening unemployment.

Get full access to this article

View all access options for this article.

References

Antel

John J.

1985. “Costly Employment Contract Renegotiation and the Labor Mobility of Young Men.” American Economic Review, Vol. 75, No. 5 (December), pp. 976–91.

Antel

John J.

1986. “Human Capital Investment Specialization and the Wage Effects of Voluntary Labor Mobility.” Review of Economics and Statistics, Vol. 68, No. 3 (August), pp. 477–83.

Antel

John J.

1988. “Interrelated Quits: An Empirical Test of the Utility Maximizing Mobility Hypothesis.” Review of Economics and Statistics, Vol. 70, No. 1 (February), pp. 17–22.

Barron

John M.

, and McCafferty

Stephen

. 1977. “Job Search, Labor Supply, and the Quit Decision: Theory and Evidence.” American Economic Review, Vol. 67, No. 4 (September), pp. 683–91.

Black

Matthew

. 1981. “An Empirical Test of On-the-job Search Theory.” Journal of Human Resources, Vol. 16, No. 1 (Winter), pp. 129–40.

Blau

Francine D.

, and Kahn

Lawrence M.

. 1981. “Race and Sex Differentials in Quits by Young Workers.” Industrial and Labor Relations Review, Vol. 34, No. 4 (July), pp. 563–77.

Borjas

George J.

1981. “Job Mobility and Earnings over the Life Cycle.” Industrial and Labor Relations Review, Vol. 34, No. 3 (April), pp. 365–76.

Borjas

George J.

1984. “Race, Turnover, and Male Earnings.” Industrial Relations, Vol. 23, No. 1 (Winter), pp. 73–89.

Burdett

Kenneth

. 1978. “A Theory of Employee Job Search and Quit Rates.” American Economic Review, Vol. 68, No. 1 (March), pp. 212–20.

10.

Ellwood

David T.

1982. “Teenage Unemployment: Permanent Scars or Temporary Blemishes?” In Freeman

Richard B.

and Wise

David A.

, eds., The Youth Labor Market Problem: Its Nature, Causes, and Consequences. Chicago: University of Chicago Press, pp. 349–85.

11.

Freeman

Richard B.

1980. “The Exit-Voice Tradeoff in the Labor Market: Unionism, Job Tenure, Quits, and Separations.” Quarterly Journal of Economics, Vol. 94, No. 4 (June), pp. 643–73.

12.

Heckman

James J.

1978. “Dummy Endogenous Variables in a Simultaneous System.” Econometrica, Vol. 46, No. 4 (July), pp. 931–60.

13.

Kahn

Lawrence M.

, and Low

Stuart A.

. 1984. “An Empirical Model of Employed Search, Unemployed Search, and Nonsearch.” Journal of Human Resources, Vol. 19, No. 1 (Winter), pp. 104–17.

14.

Kahn

Lawrence M.

, and Low

Stuart A.

. 1982. “The Relative Effects of Employed and Unemployed Job Search.” Review of Economics and Statistics, Vol. 64, No. 2 (May), pp. 234–41.

15.

Madalla

G. S.

1983. Limited-Dependent and Qualitative Variables in Econometrics. Cambridge: Cambridge University Press, pp. 46–49.

16.

Matilla

J. Peter

. 1974. “Job Quitting and Frictional Unemployment.” American Economic Review, Vol. 64, No. 1 (March), pp. 235–39.

17.

Mincer

Jacob

. 1962. “On-the-Job-Training: Costs, Returns, and Some Implications.” Journal of Political Economy, Vol. 70, No. 5 (October), pp. 50–79.