Should We Clash or Should I Go? the Impact of Low Wage and Bad Working Conditions on the Exit–Voice Trade-Off

Although Hirschman’s exit–voice theoretical model has been applied to labor markets, research up to now has not tested one of its most important features: the impact of job quality on exit–voice strategies. Hirschman’s model of consumer behavior explains that those individuals unsatisfied with a product’s quality are more likely to “voice,” whereas those more concerned with its price are more likely to “exit.” A rationale for this trade-off is based on information: first, information on the price of alternative options is much more accessible than information on quality; second, voice produces more information than exit and favors opportunities for specific improvements. We transpose Hirschman’s assumptions to labor markets and use the three linked employer-employee datasets to test it : the French SalSa survey (2009), a cross-section file matched with the administrative DADS panel, the French 2004 and 2011 Réponses surveys (firm panelized) and the UK 2004 and 2011 WERS surveys (firm panelized). Our results support the Hirschmanian hypothesis in both countries, both at the individual and the aggregate firm level. A deterioration of our working-conditions index increases the probability of participation in collective action. An increase in log hourly wage decreases the probability of quitting