The relative impacts of the level and change in wages on quits

Investigates the effects on quits of the current level of wages and the change in wages in order to test the proposition that the change in wages has a negative impact on quits, even controlling for the current level of wages. Finds that the percentage deviation in a worker′s wage change from its predicted level has an effect on quits that is three to six times stronger than the effect of the percentage deviation in a worker′s current wage from its predicted level. Claims this result may have implications for the behaviour of firms in setting wages and in the behaviour of wages over the business cycle.