Optimal number of job changes

Abstract

Under maximizing behavior, an optimal mobility function is derived from an earnings function and a mobility cost function, where the coefficients are variable depending on working history. Two approaches are distinguished: one with uniform and one with variable rates of growth. The most important determinants of optimal number of jobs are the earnings growth factor, previous experience, firm size, social background, and schooling. A comparison between optimal and actual number of job changes and the ML estimator of a probit model reveals that high skilled workers with limited experience and poor family background have a propensity to quit that is too low.