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Non‐linear Effects of Comparison Income in Quit Decisions: Status versus Signal!
Author(s) -
Pfeifer Christian,
Schneck Stefan
Publication year - 2012
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1467-9914.2012.00549.x
Subject(s) - wage , probit model , economics , demographic economics , probit , german , ordered probit , econometrics , random effects model , labour economics , medicine , geography , meta analysis , archaeology
This research note utilizes German matched employer–employee data to investigate the relationship between mobility and relative wage positions within establishments for workers without university degrees. The main innovation involves the examination of non‐linear effects, because previous literature mainly analyses mean linear effects. Our random‐effects probit estimates of mobility suggest a non‐linear U‐shaped effect with respect to relative standing. This is plausible because workers in low relative wage positions might quit because of their low status and those in high relative wage positions because of their low career advancement opportunities. Consideration of non‐linearities, thus, is a major improvement for the analysis of the effects of relative wage positions.