Labour turnover is typically higher for unskilled workers in low productivity jobs. This paper
suggests that this empirical finding is due to the matching process being less efficient at the bottom
than at the top of the jobs' distribution. A simple theoretical model of employers' search shows that
firms find it optimal to invest relatively little in advertisement and screening when recruiting for low
productivity jobs. This generates more separations and higher turnover. Unique data from a sample
of recruiting establishments in Britain, containing detailed information about employers’ recruitment
practices, are used to test the implications of the model. |
