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STEADY‐STATE LABOR TURNOVER AS OPTIMAL HOUSEHOLD BEHAVIOR *
Author(s) -
Gruver Gene W.,
Zeager Lester A.
Publication year - 1994
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1994.tb00856.x
Subject(s) - amenity , consumption (sociology) , economics , wage , utility maximization , turnover , labour economics , differential (mechanical device) , microeconomics , econometrics , demographic economics , mathematical economics , social science , management , finance , sociology , engineering , aerospace engineering
. Models of the firm with costly labor turnover and models of migration with location‐specific consumption amenities are two standard explanations of the co‐existence of persistent wage differentials with extensive labor mobility. Labor turnover models postulate a worker quit function where the quit rate is inversely related to the regional wage differential in the steady state. We use amenity‐consumption models of migration to show conditions under which this postulate is consistent with household utility maximization. Our model extends standard amenity‐consumption analysis by making the value of amenities contingent on the “state” of the household. These household states are defined in terms of demographic, education, and health characteristics and are assumed to follow a Markov process.