The relative impacts of the level and change in wages on quits

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Abstract
Investigates the effects on quits of the current level of wages and the change in wages in order to test the proposition that the change in wages has a negative impact on quits, even controlling for the current level of wages. Finds that the percentage deviation in a worker′s wage change from its predicted level has an effect on quits that is three to six times stronger than the effect of the percentage deviation in a worker′s current wage from its predicted level. Claims this result may have implications for the behaviour of firms in setting wages and in the behaviour of wages over the business cycle.

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