Job mobility has traditionally served as a primary adjustment process for workers and employers. The economic conditions affecting job mobility decisions range from discretionary choice factors such as a desire for better pay, working conditions, and opportunities for advancement to exogenous factors beyond the control of workers for example, plant relocations and shutdowns, recessionary or structural declines in the demand for labor, and technological change. This distinction between mobility emulating from discretionary factors and mobility resulting from exogenous changes suggests that in analyzing job changing behavior, it is useful to separate workers into three groups: voluntary movers, involuntary movers, and stayers.
Analysis of determinants of the job changing behavior of members of the first two groups is important in gaining a better understanding of worker mobility and labor market flexibility. For example, worker response to wage differences between current jobs and potential alternative jobs helps determine whether such differences serve as an efficient labor supply adjustment mechanism. A related concern is the role of specific and general human capital on job moves and wages.
Using a unified conceptual framework, this paper outlines a sequential two-stage probability model for job moves. This model is estimated on a nationally representative sample of white adult male workers from the 1984 panel of the Survey of Income Program Participation. The model's first stage, which is described in Section II, focuses on voluntary job moves and the second, which is discussed in Section III, pertains to involuntary job moves. Stage I is treated as supply-driven; workers are viewed as selecting themselves as either voluntary movers or erstwhile stayers. Stage II is modelled as demand-driven; employers are viewed as selecting some of the erstwhile stayers to lay-off or fire. Hence, some erstwhile stayers become involuntary movers. The distinction between voluntary separations as a function of alternative wages in the external labor market and involuntary separations based on internal conditions within the firm is also found in employment contract and wage bargaining models (Hall and Lazear, 1984).
The probability of making a job change at either Stage I or Stage II is modelled in terms of wage differentials, a set of human capital determinants, and industry and occupation variables. The model focuses on the role of wages, rather than on non-pecuniary, job satisfaction factors (Gottschalk and Maloney, 1984; Akerloff, Yellen and Rose, 1988). We particularly emphasize the importance of the gap either positive or negative—between workers' wages on their present job and their alternative or opportunity wages—that is, the best wage they could receive on an alternative job. If this gap does, in fact, influence decisions on whether or not to change jobs, wage levels subsequent to these decisions will, in turn, be affected. This topic is examined in Section IV.
