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

Author
Keywords
Abstract

I estimate the relative magnitudes of worker switching costs and whether 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 agewage
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.

Year of Publication
2008
Number
543
Date Published
12/2008
Publication Language
eng
Citation Key
8313
URL
Working Papers