Employee Tenure and Economic Losses in Wrongful Termination Cases

Abstract

When calculating lost earnings in wrongful employment termination cases, economists should approximate the amount of time a terminated employee would have remained employed for the defendant employer accounting for the probabilities of surviving, participating in the labor force, being employed, and remaining employed for that particular employer. I develop a model for the annual probability of remaining with a particular employer using National Longitudinal Survey of Youth data, which tracks the employment experiences of a nationally-representative cohort of individuals over the 1979 through 2010 period. Many employment spells are relatively short, so short tenures are associated with a high probability of leaving an employer. After a point, somewhat longer tenures are associated with a higher probability of remaining with an employer an additional year.