Earnings-Tenure Profiles: Tests of Agency and Human Capital Theories Using Individual Performance Data

32 Pages Posted: 23 Nov 2007

See all articles by Derek C. Jones

Derek C. Jones

Hamilton College - Economics Department

Xiao-Yuan Dong

University of Winnipeg

Takao Kato

Colgate University - Economics Department; IZA Institute of Labor Economics

Date Written: October 2007

Abstract

By using a large new panel of individual data, including objective measures of worker performance, we provide some of the most rigorous evidence to date on several related dimensions of enduring debates surrounding upward-sloping earnings-tenure profiles. Most importantly we provide the first direct test of the relative validity of human capital and agency explanations in accounting for upward-sloping earnings-tenure profiles; our findings strongly support the agency view. Our second area of interest concerns employee ownership (many workers at our case are employee owners). Consistent with agency theory we find that earnings-tenure profiles for employee owners are not upward-sloping but horizontal. In addition we find that pay-performance sensitivities are substantially weaker for employee owners than for other workers. Finally we investigate the impact of residential policies in China. We find that again consistent with the agency view, earnings-tenure profiles are considerably steeper for urban workers than for migrant workers with far more limited alternative employment opportunities.

Keywords: earnings, tenure, seniority, performance, human capital, agency, employee ownership

JEL Classification: J3, M5, L6

Suggested Citation

Jones, Derek C. and Dong, Xiao-Yuan and Kato, Takao, Earnings-Tenure Profiles: Tests of Agency and Human Capital Theories Using Individual Performance Data (October 2007). IZA Discussion Paper No. 3122. Available at SSRN: https://ssrn.com/abstract=1032098

Derek C. Jones

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States
315-859-4381 (Phone)
315-859-4477 (Fax)

Xiao-Yuan Dong

University of Winnipeg ( email )

Winnipeg, Manitoba R3B 2E9
Canada

Takao Kato (Contact Author)

Colgate University - Economics Department ( email )

13 Oak Drive
Hamilton, NY 13346
United States
315-228-7562 (Phone)
315-228-7033 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
85
Abstract Views
619
rank
309,164
PlumX Metrics