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The Effects of Labor Market Experience, Job Seniority and Job Mobility on Wage Growth
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JOSEPH G. ALTONJI
Yale University - Economic Growth Center; National Bureau of Economic Research (NBER)
NICOLAS WILLIAMS III
University of Cincinnati - Department of Economics
Research in Labor Economics, Vol. 17, 1998
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Abstract:
This paper studies the returns to seniority, the returns to experience, and the effects of seniority and experience at the time of a quit or layoff on changes in the job match specific component of wages. We show that these returns are not identified in widely used regression models that relate the wage changes of stayers, quits, and layoffs to tenure and experience. We deal with the identification problem by using Geweke's (1986) Bayes procedure to combine the sample information with prior information about inequalities that the parameters must satisfy. We derive two of the inequalities from a simple model of wages and mobility, which we use to argue that the relationship between the change in the job match component and tenure at the time of a quit (layoff) will be positive (negative). We use two other inequalities that state that there is at least a small return to 30 years of experience and that persons who are laid off with substantial seniority suffer a fall in the job match specific component of wages. We find that the return to tenure is probably above Altonji and Shakotko's (1987) estimate for an earlier sample period but well below OLS estimates. We also find that there is a large return to general labor market experience that is independent of job shopping.
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JEL Classifications: J3
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Accepted Paper Series
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Contact Information for
JOSEPH
G.
ALTONJI
(Contact Author)
Email address for JOSEPH
G.
ALTONJI
Yale University - Economic Growth Center
Box 208269
New Haven
, CT
06520-8269
United States
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(No e-mail address available for JOSEPH
G.
ALTONJI
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge
, MA
02138
United States
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Contact Information for
NICOLAS
WILLIAMS III
Email address for NICOLAS
WILLIAMS III
University of Cincinnati - Department of Economics
1202 Crosley
P.O. Box 210371
Cincinnati
, OH
45221-0371
United States
513-556-2390 (Phone)
513-556-2669 (Fax)
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