Job Matching and the Theory of Turnover

Abstract

A long-run equilibrium theory of turnover is presented and is shown to explain the important regularities that have been observed by empirical investigators. A worker's productivity in a particular job is not known ex ante and becomes known more precisely as the worker's job tenure increases. Turnover is generated by the existence of a nondegenerate distribution of the worker's productivity across different. The nondegeneracy is caused by the assumed variation in the quality of the worker-employer match.