A Structural Dynamic Analysis of Job Turnover and the Costs Associated with Moving to Another Job.

This paper provides an empirical analysis of the labor market behavior of employed individuals using a structural on-the-job search model. The costs associated with moving to another job are allowed to be nonzero and may depend on the wage level. It is shown that, under certain conditions, the optimal strategy has the reservation wage property. The model is estimated using data on job durations and subjective responses concerning the search strategy. The results reveal some strong sources of inflexibility of the labor market. Copyright 1992 by Royal Economic Society.