Skip to main content
Distortions and policies when labor turnover is costly.
Faculty Publications
  • Thomas J. Carter, University of South Florida St. Petersburg
SelectedWorks Author Profiles:

Thomas J. Carter

Document Type
Publication Date
This paper uses a turnover model of efficiency wages that explicitly considers the microfoundations of the worker's choice to stay or quit. Here, there are two distortions. Employment and productivity are both too low to be optimal. Productivity is too low because turnover is too high. With a government budget constraint, policies that alleviate one distortion must aggravate the other. The results show that increasing productivity improves welfare even though it also leads to greater unemployment. Policies that increase productivity are wage- rate subsidies, hiring taxes, and minimum wage laws.

Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.

Mohr Siebeck GmbH & Co. KG
Creative Commons License
Creative Commons Attribution-Noncommercial-No Derivative Works 4.0
Citation Information
Carter, T. J. (1993). Distortions and policies when labor turnover is costly. Journal of Institutional and Theoretical Economics (JITE), 149, 547-558.