Existing management research has so far dealt with the consequences of labor turnover for established firms, but has not addressed its effect on young entrepreneurial businesses. In this paper I assess, both theoretically and empirically, the productivity effects of worker replacement in young...

I present a new discrimination model of the labor market in which employers are initially uncertain about the productivity of worker groups and endogenously learn about it through their hiring. Previous hiring experiences of an employer shape their subsequent decisions to hire from a group again...