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The popular press often touts workforce demographic diversity as profit enhancing because it may reduce the firm's communication costs with particular segments of customers or yield greater team problem-solving abilities. On the other hand, diversity also may raise communication costs within teams, thereby retarding problem solving and lowering productivity. Unfortunately, there is little empirical research that disentangles the above countervailing effects. Diversity in ability enhances the team productivity if there is significant mutual learning and collaboration within the team, while demographic diversity may harm productivity by making learning and peer pressure less effective and increasing team-member turnover. We evaluate these propositions using a novel panel data from a garment plant that shifted from individual piece rate to group piece rate production over three years. Because we observe individual productivity data, we are able to econometrically distinguish between the impacts of diversity in worker abilities and demographic diversity. Teams with more heterogeneous worker abilities are more productive at the plant. Holding the distribution of team ability constant, teams composed of only one ethnicity (Hispanic workers in our case) are more productive, but this finding does not hold for marginal changes in team composition. We find little evidence that workers prefer to be segregated; demographically diverse teams are no more likely to dissolve, holding team productivity (and hence pay) constant, than homogeneous teams.

Scholars often suggest that institutionalized employee voice reduces turnover as an alternative to exit when employees are dissatisfied. Paradoxically, Denmark presents a case of high union density and thus high institutionalized employee voice, yet high turnover rates. To explore the Danish turnover paradox, this chapter looks at the macro-societal contextual factors impacting turnover rates in the Danish labor market. Institutional characteristics such as the flexicurity model (i.e., a welfare state model with proactive labor market policy; a portmanteau of flexibility and security), legal frameworks (i.e., relatively lax labor market regulations), and cultural factors (i.e., a culture of equality and collective collaborative structures) are all relevant to understand the high turnover rates in Denmark. The authors first overview the general trends and figures on turnover in Denmark and then examine the Danish institutional, legal, and cultural factors as they relate to the high turnover rates in the Danish labor market. Finally, the authors summarize and discuss the findings and consider their implications for research and practice related to employee turnover in the Nordics and beyond.

Higher replacement rates often imply higher levels of absenteeism, yet even in generous welfare economies, employers provide sick pay in addition to the public sick pay. Using comparative population-representative workplace data for Britain and Norway, we show that close to 50% of private sector employers in both countries provide sick pay in excess of statutory sick pay. However, the level of statutory sick pay is also much higher in Norway than in Britain. In both countries, private sick pay as well as other benefits provided by employers are chosen by employers in a way that maximizes profits having accounted for different dimensions of labor costs. Several health-related privately provided benefits are often bundled. In both countries easy-to-train workers, high turnover and risky work are linked to less extensive employer provision of extended sick leave and sick pay in excess of statutory sick pay. In contrast, the presence of a trade union agreement is strongly correlated with both the provision of private sick pay and extended sick leave in Britain but not in Norway. We show that the sickness absence rate is much higher in Norway than in Britain. However, the higher level of absenteeism in Norway compared to Britain relates to the threshold for statutory sick pay in the Norwegian public sick pay legislation. When we take this difference into account, no significant difference remains.

Personnel economics tends be based on single-firm case studies. Here, we examine several internal labor market dimensions of nearly 5,000 firms, over a period of 20 years, using detailed matched employer–employee data from Portugal. In the spirit of Baker, Gibbs, and Holmstrom (1994a, 1994b), we consider worker turnover, the role of job levels and human capital as wage determinants, wage dispersion within job levels, the importance of tenure in promotions and exits, and the scope for careers. We find a large degree of diversity in most of these personnel dimensions across firms. Moreover, some dimensions are shown to be robust predictors of firm performance, even after controlling for time-invariant firm heterogeneity and other variables. These dimensions include low worker churning, the importance of careers, low wage dispersion at low and intermediate job levels, and a tight relationship between human capital variables and wages.

The topic of company unions – employee associations sponsored and organized by management – has generated strong feelings. For many years, conventional labor unions have been vehemently opposed to worker representation through company unions.¹ Conventional labor unions have viewed company unions as devices by management to forestall or thwart independent unionism (i.e. unions organized by workers).² According to this interpretation, a company union would give the appearance of providing employees with representation and induce workers to temper their demands for genuine collective bargaining. Thus, at their Annual Convention of 1919, the American Federation of Labor described company unions as “…a delusion and a snare, set up by the companies for the express purpose of deluding the workers into the belief that they have some protection and thus have no need for trade union organization: therefore be it Resolved, That we disapprove and condemn all such company unions and advise our membership to have nothing to do with them…” (Quoted in Douglas, 1919, p. 103).

Using Spanish establishment-level data on temporary and permanent job and worker flows, we examine firms’ relative usage of fixed-term contracts in response to changes in their prior net employment expectations for the short-run and the long-run – viewed as proxies of how a wide variety of future shocks are ultimately perceived by establishments. The employment response of establishments to changing net employment expectations for the short-run is, primarily, suggestive of their reliance on fixed-term contracts as a buffer to cushion short-run changes in demand as well as to shield permanent workers from downward workforce adjustments. In contrast, their response to changes in net employment expectations for the long-run mostly hints on the use of fixed-term contracts as a screening device. Therefore, policies providing financial incentives to convert fixed-term into permanent contracts – thus targeting firms’ using fixed-term contracts as a screening device, are likely to only have limited effectiveness.