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Do Higher Wages Reduce Knowledge Worker's Job Mobility? Evidence for Swedish Inventors

Ejermo, Olof LU and Schubert, Torben LU (2017) In Journal of Management Studies
Abstract

Based on linked employer-employee panel data on all Swedish inventors, this paper analyses how wages affect inventors' job mobility. It is commonly assumed that higher wages reduce mobility because they reduce the value of outside opportunities. We argue that higher wages also send performance signals to potential employers, who raise their wage offers in response. By disentangling the effects of higher wages, we show evidence of a utility and an opportunity cost effect, which reduce mobility, and a performance-signalling effect, which increases mobility. In our data, the effects cancel each other out, with no effects of wages on mobility rates on average. We find, however, that for star inventors, who have sufficiently strong... (More)

Based on linked employer-employee panel data on all Swedish inventors, this paper analyses how wages affect inventors' job mobility. It is commonly assumed that higher wages reduce mobility because they reduce the value of outside opportunities. We argue that higher wages also send performance signals to potential employers, who raise their wage offers in response. By disentangling the effects of higher wages, we show evidence of a utility and an opportunity cost effect, which reduce mobility, and a performance-signalling effect, which increases mobility. In our data, the effects cancel each other out, with no effects of wages on mobility rates on average. We find, however, that for star inventors, who have sufficiently strong alternative performance signals (e.g., strong patent records), the performance signal sent by wages is crowded out by the alternative signals. Accordingly, for star inventors we find that higher wages decrease mobility.

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Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
epub
subject
keywords
Inventors, Mobility, Signalling, Wages
in
Journal of Management Studies
publisher
Wiley-Blackwell
external identifiers
  • scopus:85034270910
  • wos:000417578200005
ISSN
0022-2380
DOI
10.1111/joms.12317
language
English
LU publication?
yes
id
27097293-464a-4d68-ae1d-b5c8c5c20ea6
date added to LUP
2017-12-11 09:01:14
date last changed
2018-01-16 13:27:26
@article{27097293-464a-4d68-ae1d-b5c8c5c20ea6,
  abstract     = {<p>Based on linked employer-employee panel data on all Swedish inventors, this paper analyses how wages affect inventors' job mobility. It is commonly assumed that higher wages reduce mobility because they reduce the value of outside opportunities. We argue that higher wages also send performance signals to potential employers, who raise their wage offers in response. By disentangling the effects of higher wages, we show evidence of a utility and an opportunity cost effect, which reduce mobility, and a performance-signalling effect, which increases mobility. In our data, the effects cancel each other out, with no effects of wages on mobility rates on average. We find, however, that for star inventors, who have sufficiently strong alternative performance signals (e.g., strong patent records), the performance signal sent by wages is crowded out by the alternative signals. Accordingly, for star inventors we find that higher wages decrease mobility.</p>},
  author       = {Ejermo, Olof and Schubert, Torben},
  issn         = {0022-2380},
  keyword      = {Inventors,Mobility,Signalling,Wages},
  language     = {eng},
  month        = {11},
  publisher    = {Wiley-Blackwell},
  series       = {Journal of Management Studies},
  title        = {Do Higher Wages Reduce Knowledge Worker's Job Mobility? Evidence for Swedish Inventors},
  url          = {http://dx.doi.org/10.1111/joms.12317},
  year         = {2017},
}