Labour Institute for Economic Research. Discussion Papers no. 262
We examine the effects of establishment- and industry-level labor market turnover on employees well-being. The linked employer-employee panel data contain both survey information on employees subjective well-being and comprehensive register-based information on job and worker flows. Labor market turbulence decreases well-being as experienced job satisfaction and satisfaction with job security are negatively related to the previous years flows. We test for the existence of compensating wage differentials by explaining wages and job satisfaction with average uncertainties, measured by an indicator for a high moving average of past excessive turnover (churning) rate. The results are consistent with compensating wage differentials, since high uncertainty increases real wages, but has no effect on job satisfaction.