What Causes Labor Turnover to Vary?

Abstract

Most turnover reflects churn, where hires replace departures. Churn varies substantially by employer, industry and worker characteristics. For example, leisure and hospitality turnover is more than double that of manufacturing. In the LEHD (QWI) data, permanent employer differences account for 36% of the variation in churn. The cost of churn is proxied by the mean wage and the benefit by the variance in wages. QWI and JOLTS data confirm predictions that high mean wage labor markets experience less churn and high wage-variance ones experience more churn. Additionally, less educated, younger and male workers have higher separation and churn rates.