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Olof Ejermo. Photo.

Olof Ejermo

Professor

Olof Ejermo. Photo.

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

Author

  • Olof Ejermo
  • Torben Schubert

Summary, in English

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.

Department/s

  • CIRCLE

Publishing year

2018-01

Language

English

Pages

108-145

Publication/Series

Journal of Management Studies

Volume

55

Issue

1

Document type

Journal article

Publisher

Wiley-Blackwell

Topic

  • Economic Geography

Keywords

  • Inventors
  • Mobility
  • Signalling
  • Wages

Status

Published

ISBN/ISSN/Other

  • ISSN: 0022-2380