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This chapter discusses how design of training policies is strongly related to the type of market failures conducive to under-provision. The empirical evidence on the relevance of efficiency and equity issues is considered, and a political economy view of training subsidies is proposed. Furthermore, the key features of the training policies in place and the implications for training and product market reforms are examined, along with the evidence on the effect of training on turnover and the limited evidence on the importance of credit constraints. The chapter concludes that one needs to be prudent when designing public policies aimed at raising the provision of workplace training; there is no clear-cut evidence that the level of workplace training produced by firms and employees is significantly lower than the socially efficient level; governments have an important role to play in improving information about training opportunities, setting appropriate legal frameworks, and ensuring portability of skills; product and labour market reforms do affect training participation.

This chapter summarizes the lessons from Chapter 4 in the form of a function that describes endogenous political turnover. This preliminary allows us to study equilibrium investments in fiscal and legal capacity in the comprehensive core model. Section 5.2 develops the model by adding private capital formation along the same lines as in Section 3.2.3, but in a setting where the risk of civil war affects the expected return to private investment. Section 5.3 discusses the empirical implications of our comprehensive framework and how it can be used to interpret observed patterns in the data. Section 5.4 puts the typologies of investment states and violence states together into an Anna Karenina principle of development, an allusion to the Tolstoy quote at the beginning of the chapter. It also briefly revisits the possibility of a predatory state and observes how this enriches our understanding of nonprosperity.

The value‐added tax was finally introduced in Japan in April 1989, after long‐standing trial and error by the government. The whole picture of Japan's VAT must be clarified before and after its introduction, focussing on its key trend of VAT in the world and historical background, its main features, its economic aspects and administrative consequences, and local VAT.

This chapter describes some methodological and conceptual issues that arise when using the Job Openings and Labor Turnover Survey (JOLTS) data. It uses the publicly available JOLTS data to empirically explore the widely used theoretical construct of the matching function. The data shows that the mismeasurement of labor turnover in the JOLTS is a larger problem than at first appears from the aggregate data. The understatement of the separation rate is a key reason that the JOLTS data overstate employment growth in the U.S. economy. The chapter then evaluates the influence of the employment growth discrepancy between the JOLTS and the Center for Economic Studies on the measurement of labor turnover. There is variation in the process of matching across industries due to the different characteristics of jobs and workers in these industries. Also, it is possible that the measurement issues discussed systematically affect the measurement of vacancies and hires across industries.

The Truckers and Turnover Project is a statistical case study of a single large trucking firm and its driver employees. The cooperating firm operates in the largest segment of the for-hire trucking industry in the United States, the “full truckload” (TL) segment, in which approximately 800,000 people are employed. The TL segment has a high turnover labor market for its main employee group, tractor-trailer drivers, and the project is designed to address a number of academic and business questions that arise in this setting. The most distinctive innovation of this project component is the data collection process, which combines traditional survey instruments with behavioral economics experiments. Using behavioral economics field experiments, this chapter examines the context and design of the Truckers and Turnover Project. It first describes the U.S. trucking industry and the role of the TL segment within it. It then discusses the nature of the labor market for TL drivers, explains why it has had a high turnover equilibrium for about twenty-five years, and presents preliminary findings on employee turnover and productivity.

This chapter presents a few more details on the Swedish labor market, and then conducts formal descriptive analyses to document these changes throughout the 1970s and 1980s. The matched employee–employer data is used. The analysis of wage levels and wage changes, as well as the trends in worker mobility are elaborated. The chapter shows that the decrease in wage variation during the 1970s and the increase in the 1980s were due to increased variation of wages within firms and increased variation across firms. In addition, people in the low part of the wage distribution have the least to lose by changing jobs, and this relationship gets stronger all the way to the bottom of the wage distribution within firms. The job turnover and wage compression trends are strong for both blue- and white-collar workers in Sweden.

This chapter offers a theory that explains the origin of OAS. Observing that OAS levels differ across agency MBS types, the chapter concludes that prepayment model risk plays a fundamental role in pricing. Most commonly, investors in premium MBS fear refinancing understatement. Similarly, investors in discount MBS fear that a model overstates housing turnover. Using the risk-neutral approach, they propose deforming a prepayment model accordingly, accelerating refinancing, and decelerating turnover. Possible calibration methods include parities between OAS levels of TBAs and agency debentures or between IOs and POs; that parity level is termed prepayment-risk-and-option-adjusted spread (prOAS). The method is shown to work well, explaining historical pricing dynamics of the MBS, including Trust IOs. The chapter shows that valuation with a risk-neutral prepayment model produces more adequate risk measures and reveals possible mispricing and arbitrage.

This chapter provides new statistics on the entry, exit, and growth of farms using data from the U.S. Census of Agricultures from 1978 to 1997. Entry and exit statistics can reflect sales or leases of an existing farm and thus do not directly correspond to the movement of land in or out of agricultural production. Both the small farms and the very largest farms are increasing as a share of the total farms during the period 1978 to 1997. The average farm size in acres is larger for surviving farms than it was for either exiting or entering farms during the four subperiods. The microanalysis of turnovers reveals considerable structural change underlying the traditional aggregate indicators of farm structure. There is large-scale reallocation of outputs and inputs in agriculture. The majority of surviving farms change their farm size.

This chapter explores the richness of the Longitudinal Employer-Household Dynamics (LEHD) data set by augmenting it with publicly-available data on employee benefits offered by different companies. It demonstrates that the level of benefits offered by a firm is negatively associated with employee turnover. Firms that offer benefits have higher-skilled workers and these skilled workers have lower turnover rates. Moreover, firms offering benefits have higher labor productivity and are more likely to survive, even after controlling for worker and firm characteristics and wage compensation. Benefits in general are negatively related to churning rates. Firms with high churning rates tend to grow more slowly. The firm wage effect has a strong positive relationship with growth rates. The results generally confirm that there is a correlation between a firm's decision to offer benefits and the mobility and productivity of its labor force as well as the firm's length of life.

This book deals with the measurement and explanation of producer dynamics. The first section of the book describes the data of a project undertaken to develop comparable cross-country data on firm entry, exit, and turnover. The second section uses the new data series on employment dynamics. The next section looks beyond the traditional data sources, concentrating on producer dynamics in retailing, service industries, and agriculture, and extending the measurement of producer dynamics to the nonemployer segment of the business universe. The fourth section utilizes the linked employer and employee data to present a more detailed picture of worker turnover and the human capital present at a workplace. The final section employs micro data to examine transitions of firms into and out of import and export markets. Finally, an overview of the chapters included in this book is given.

This chapter addresses the entry and exit of establishments and firms in the U.S. retail sector based on analysis of the Census Bureau's newly developed Longitudinal Business Database (LBD). It demonstrates that firm turnover has declined over time in most retail industries but differs systematically by market size and ownership structure. Metro areas have the highest producer turnover while rural areas have the lowest. Independently-owned stores experience higher turnover compared to chain stores. Single location retail firms have on average increased in size since 1976. The firm exit rates are highest in metropolitan markets and slightly higher in micropolitan markets than in rural markets. The mom-and-pop stores have the largest exit rates, regardless of industry or unit of measure. Chain stores and mom-and-pop stores appear to be able to coexist in some industries better than others.

This chapter reviews the producer dynamics and labor productivity growth in U.K. retailing. The data indicate that producer turnover in U.K. retailing improves productivity by replacing lower productivity exiting firms with higher productivity entering firms. In 2003, there were 285,291 stores in U.K. retailing and 196,286 firms/chains. Entry/exit/one-year/stayers are fairly stable fractions of all stores, being about 11 percent, 11 percent, 5 percent, and 63 percent. Entry and exit rates are lowest in “Pharmaceuticals” and highest in “Not in Stores.” The variation in labor productivity across retailers is somewhat larger than in the U.S. If anything, the contribution of entry and exit to productivity growth is somewhat smaller than in the U.S. There was a change in planning regulations in 1996 that greatly stopped retailers developing out-of-town shops.

Gary S. Becker's (1964) seminal work on investment in human capital makes a fundamental distinction between general and firm-specific skills, which has implications for investment and employee turnover. Firm-specific human capital is defined as having value only to the current employment relationship, while general human capital is valuable to both current and potential employers. Becker's theory predicts that employees will bear the full cost of general skills training—either by paying for training directly or by accepting lower wages during training periods—because employers face the threat of not capturing the return on their investment due to “poaching” of trained employees by other employers. Tuition reimbursement programs are an example of general skills training provided by firms. This chapter examines empirically whether employees who participate in tuition reimbursement have higher retention rates than non-participants using a case study analysis of workers at a nonprofit institution. The results indicate that participation reduces employee turnover. Hence, general skills training increases retention.

This chapter analyzes the relationship of various forms of shared capitalist compensation to six workplace outcomes—turnover, absenteeism, perceived effort of co-workers, loyalty to the firm, willingness to work hard, and frequency of worker suggestions to improve productivity from the perspective of shared capitalism. It also examines employee responses to questions about their response to shared capitalist incentives and analysis using the General Social Survey (GSS) and NBER data sets. It states that shared capitalism affects workplace performance and substantiated by the fact that the results from the NBER sample are broadly similar to the results from the nationally-representative GSS. Shared capitalism is linked to lower turnover and greater loyalty and willingness to work hard, particularly when combined with high-performance policies, low levels of supervision, and fixed pay at or above market levels. Workplaces where workers average more shared capitalist compensation report greater employee effort along several dimensions.

This chapter, which describes some key features of the labor market in Denmark, also addresses the important aspect of its functioning and flexibility: the high level of worker mobility. Then, it explores the wage structure between and within firms, and changes therein since 1980. The Danish labor market, which is characterized by both high job mobility and high wage mobility, has an institutional setup that strongly facilitates mobility. The observed increase in overall wage dispersion is predominantly due to increasing wage differentials between firms. Moreover, Denmark has experienced a shift in wage bargaining from a highly centralized system to a considerably more decentralized wage setting. There has been a clear increase in between-firm wage inequality. Although labor turnover rates are high, a considerable portion of workers are in long-term employment relationships.

This chapter examines whether countries with more business stability pay the price of lower growth but also reap the benefits of greater social justice. That is, it asks whether greater business turnover is systematically associated with a worse social infrastructure, as manifested in less liberty, fraternity, or equality. A wide range of indicators of social well-being are considered, including measures of environmental degradation, health, education, poverty, inequality, and fundamental rights. The study finds no evidence that business stability is associated with better social outcomes.

The goal of prepayment modeling is to estimate the probability of loan termination using information about the loan, the borrower, the collateral, and the economic conditions. This chapter focuses on pool-level models of total terminations for confirming (agency-quality) loans. Prepayment modeling relies on available data and utilizes “drivers.” Among them are refinancing incentive, housing turnover, and burnout, which can be explained by heterogeneity of borrowers (an “active-passive” decomposition specification is given in the chapter). Models should be subject to subjective evaluation, continuous monitoring, and Bayesian adaptation. The knowledge of additional characteristics, such as loan size, credit score, LTV, etc., can help design a more accurate (“enhanced”) prepayment model.

This chapter explores the link between worker turnover, workforce quality, and worker pay, as well as success as measured by firm performance. More productive firms pay above-average wages to their workers, have a higher-quality workforce and lower turnover, and have more skilled workers, although these relationships vary substantially across industries. Average productivity in the software industry rises substantially as low-productivity exiting firms are replaced by higher-productivity entering firms. Industry productivity dynamics are closely associated to firm entry and exit and restructuring. Establishments that exit are less productive and have higher turnover and lower workforce quality than firms that enter. Businesses with higher-quality workforces and lower churning are more likely survive. Firm performance is tightly linked with workforce quality and churning. Firm survival is a function of businesses with high productivity, low churning, and high human capital.

This chapter investigates the effect of economic turbulence on job ladders. Even when a company offers good job ladders, only a select group of workers may be able to move “up” onto them. Men experience better job ladders than women, who are less likely to have good jobs than are men. Job ladders in firms have changed in very different ways in response to the economic turbulence sweeping their industries. Jobs are provided predominantly by growing firms and by large firms. Small growing firms with high turnover are the largest provider of jobs in trucking and account for 25 percent of jobs in the industry. Growing firms offer better job ladders than do shrinking firms, both to low- and high-educated workers. Job ladders are usually worse in shrinking firms, since they initially pay workers less. Thus, the effects of economic turbulence on job ladders cannot be denied.