Expectations matter: Job prospects and turnover dynamics

This paper presents evidence on the effects of worker expectations on labor turnover, a topic largely ignored in the voluminous literature on labor mobility. Two survey instruments related to expected job duration and chances of promotion in the National Longitudinal Surveys of Youth are used to analyze the role of job prospects in predicting turnover dynamics. The key empirical finding is that workers with favorable job assessments have a lower and flatter tenure-turnover profile—i.e. the well-known negative structural relationship between the turnover rate and job tenure-than their counterparts with less favorable job assessments. This finding is consistent with search-and-matching theories that explicitly incorporate heterogeneity of prior beliefs about match quality.