The Relationship between Salary and Job Mobility in France: a Challenge to the Established Job-Search Models?

• Published in: Economie & statistique 2008-10
• Main Authors: Cheron, Arnaud, Ding, Guoqing
• Format: Article
• Language: English
• ISSN: 0336-1454; 1777-5574

Job-search theory has enjoyed a significant revival, boosted by the work of Burdett and Mortensen (1998), who highlighted the fact that employees' on-the-job search behaviour influences the competition which makes itself felt, by way of salaries, between companies. The equilibrium is then characterised by a dispersion of salaries, including in the absence of worker or company heterogeneity. Bowlus and Neumann (2004) recently questioned the empirical pertinence of this framework for the relationship between salary and job mobility. Theoretically, the frequency of movement from job to job decreases as salary levels rise, since an employee on a higher salary is less likely to receive a financially interesting offer. Upon closer inspection Bowlus and Neumann show, however, that this relationship would seem to be ambiguous not to say positive in the United States. Yet, the French data in the Employment survey also reveals an ambiguous statistical relationship between salary level and the probability of the employee moving to another job, instead of the negative relationship predicted by the theory. We have shown that this ambiguity could reflect a composite effect which disappears when the employees are broken down by socio-professional category, and also a particular type of professional mobility: promotions in the sense of a movement up the ladder of socio-professional categories. The estimation by socio-professional categories which we are suggesting of the classic job-search model (from a simulated moments method) appears able to explain the relationship observed between salary and the probability of job mobility, since it exclusively considers movements which do not result in a promotion or a loss in earnings. Job and Labour Force Flows in France: a Reassessment Claude Picart Recent analyses of the labour market have focused on job and labour force flows. The size of gross job flows (job creation + destruction), in comparison with net flows (job creation