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Tax and Expenditure Limitations, Salary Reductions, and Public Employee Turnover
Author(s) -
Hayes Michael S.
Publication year - 2020
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/pbaf.12269
Subject(s) - salary , turnover , labour economics , business , demographic economics , economics , public economics , management , market economy
This study examines the relationship between salary and employee turnover behavior by analyzing a natural experiment created by the New Jersey Superintendent Salary Cap (NJSSC), which caused salary reductions for 25 percent of NJ superintendents in the initial year. I find that an additional $10,000 reduction in base salary due to the NJSSC corresponds to a 16 percent increase in the likelihood of superintendent turnover. This suggests salary expenditures are important public policy levers to retain employees. This study also contributes to prior research on tax and expenditure limitations (TELs) by documenting one of the first TELs placed directly on public employees.