FACTORS AFFECTING THE OUTPUT AND QUIT PROPENSITIES OF PRODUCTION WORKERS

We formulate a simultaneous equation model to explain the wages, output, education and quit propensities of a sample of production workers. Our principal finding is that individuals that choose more education than we would expect from their observed characteristics have lower than expected quit propensities. This relationship would bias standard estimates of rates of return to education. We also find that the output of non-whites was no lower than that of whites, although their wages on previous jobs were lower, and that workers with high levels of output were more likely to quit than were workers whose output was average. © 1991 The Review of Economic Studies Limited.