Job Changes and Individual-Job Specific Wage Dynamics

25 Pages Posted: 2 Aug 2010

See all articles by Laura Hospido

Laura Hospido

Banco de España - Research Department

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This paper develops an error components model that is used to examine the impact of job changes on the dynamics and variance of individual log earnings. I use data on work histories drawn from the Panel Study of Income Dynamics (PSID) that makes it possible to distinguish between voluntary and involuntary job-to-job changes. The potential endogeneity of job mobility in relation to earnings is circumvented by means of an instrument variable estimation method that also allows to control for unobserved individual-job specific heterogeneity. Once controlled for individual and job-specific effects, the persistence within jobs is almost zero, whereas across jobs is significant but small.

Keywords: panel data, dynamic models, individual-job specific fixed effects, job changes, individual wages

JEL Classification: C23, J31

Suggested Citation

Hospido, Laura, Job Changes and Individual-Job Specific Wage Dynamics. IZA Discussion Paper No. 5088, Available at SSRN:

Laura Hospido (Contact Author)

Banco de España - Research Department ( email )

Alcala 48
Madrid, 28014
+34 913385625 (Phone)
+34 913385678 (Fax)


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