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Finance and Economics Discussion Series
Finance and Economics Discussion Series logo links to FEDS home page Firm Specific Human Capital vs. Job Matching: A New Test
Erwan Quintin and John J. Stevens

Abstract: We use a unique data set on employee turnover by industry in Arizona to test competing theories of turnover. We find that industries with lower establishment survival rates have more employee turnover, even after controlling for differences in the distribution of employee tenure. This result is consistent with a model of turnover where employees choose how much firm specific human capital to accumulate, but it is inconsistent with job matching models.

Keywords: Firm survival, employee turnover, firm specific human capital

Full paper (165 KB PDF)

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Last update: August 11, 2003