Quit Behavior Under Imperfect Information: Searching, Moving, Learning

The paper provides a search ––– theoretic interpretation of a well‐known empirical regularity ––– the inverse relationship between quit rates and job tenure. We consider a setting where the employed job searcher has incomplete information about non‐wage job attributes at the time acceptance decisions are made; hence jobs will be accepted (or refused) without full knowledge of the value of the offers. The model implies that workers with long tenure will be less likely to quit, holding wage rates constant. We also show that a risk‐neutral worker is willing to accept a wage offer that falls below his current “full” wage (in the absence of moving costs).