Keywords: Firm survival, employee turnover, human capital
Abstract: It is well known that turnover rates fall with employee tenure and employer size. We
document a new empirical fact about turnover: Among surviving employers, separation
rates are positively related to industry-level exit rates, even after controlling for tenure
and size. Specifically, in a dataset with over 13 million matched employee-employer
observations for France, we find that, all else equal, a 1 percentage point increase in
exit rates raises separation rates by 1/2 percentage point on average. Among current
year hires, the average effect is twice as large. This relationship between exit rates and
separation rates is robust to a host of data and statistical considerations. We review
several standard models of worker turnover and argue that a model with firm-specific
human capital accumulation most easily accounts for this new empirical fact.
Full paper (247 KB PDF)
Home | FEDS | List of 2005 FEDS papers
To comment on this site, please fill out our feedback form.
Last update: May 18, 2005