How Costly is Turnover? Evidence from Retail
NBER Working Paper No. 26179
We estimate turnover costs in small retail sales teams using daily sales data and an advance notice requirement to address endogeneity concerns. In addition to short-staffing and onboarding costs, we identify two less familiar sources of turnover costs: incumbent workers’ recruitment activities, and reductions in team morale after a departure is announced. Our estimates of total turnover costs are relatively modest, however: Ten percent higher turnover is about as costly as a 0.6% wage increase. We attribute these low costs to a set of complementary personnel policies which ensure that only 25 percent of departures result in a short-staffing spell.
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Document Object Identifier (DOI): 10.3386/w26179