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Permanent URI for this collectionhttps://hdl.handle.net/20.500.14288/3

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    Discretionary bonuses and turnover
    (Elsevier, 2019) Department of Economics; Ekinci, Emre; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 309364
    This paper develops a signaling model to investigate the effects of discretionary bonuses and wage increases on turnover. When the worker's output is not contractible and the firm privately learns about the match quality between the firm and the worker, bonus payments and wage increases can convey the firm's private information to the worker. If the firm credibly communicates favorable information about the match quality to a worker, the worker develops higher expectations concerning her career outcomes at the firm (such as future wage increases and promotions) and, consequently, becomes less likely to separate. The analysis demonstrates that although a wage increase and a bonus reflect the same information regarding the match quality, each serves a distinctly different role in terms of the worker's turnover decision. Specifically, the firm pays bonuses to signal a good match while using wages to respond to competing offers the worker receives. The model yields testable predictions that concern how bonuses are related to wage increases and promotions and how bonuses and wage increases are related to turnover. The empirical analysis based on the data constructed from the personnel records of a large firm in the financial services industry provides support for the model's implications.
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    Has the financial crisis affected the real interest rate dynamics in Europe?
    (Springer Science and Business Media Deutschland GmbH, 2020) Aslanidis, Nektarios; Department of Economics; Demiralp, Selva; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 42533
    We investigate the effects of the financial crisis on the stationarity of real interest rates for a group of Euro area countries. We use a new unit root test developed by Pesaran et al. (J Econom 115(1): 53–74, 2013) that allows for multiple unobserved factors in a panel set up. In this multifactor framework, we make use of a number of additional variables such as the stock price volatility and monetary policy expectations that are assumed to share common factors with the real interest rate. Based on recursive (Pesaran et al. 2013) test statistics, our results suggest that while short-term and long-term real interest rates were stationary before the financial crisis, they became non-stationary during the crisis period. Robustness analysis shows that the results are not sensitive to the use of ex-post real interest rates versus ex-ante real interest rates.