Do Wages Rise with Job Seniority? A Reassessment

48 Pages Posted: 14 Aug 2000 Last revised: 5 Jun 2022

See all articles by Joseph G. Altonji

Joseph G. Altonji

Yale University - Economic Growth Center; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Nicolas Williams

University of Cincinnati - Department of Economics

Date Written: April 1997

Abstract

We provide new estimates of the return to job seniority using data similar to that used by Abraham and Farber (1987), Altonji and Shakotko (1987) and Topel (1991) as well as a new PSID sample. Topel's use of a wage and a tenure that refer to different years, his use of the Current Population Survey to detrend the PSID, and differences between Altonji and Shakotko's estimator and Topel's estimator explain the fact that Topel obtains much larger estimates. The evidence from the data used by AS and Topel points to an effect of ten years of tenure on the log wage equal to .11, which is above AS's preferred estimate of .066 but far below Topel's estimate. However, this estimate is probably biased upward by the wage measure used in all three studies. We also obtain a modest estimate of the return to seniority using data for 1983-1991.

Suggested Citation

Altonji, Joseph G. and Williams, Nicolas, Do Wages Rise with Job Seniority? A Reassessment (April 1997). NBER Working Paper No. w6010, Available at SSRN: https://ssrn.com/abstract=226421

Joseph G. Altonji (Contact Author)

Yale University - Economic Growth Center ( email )

Box 208269
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National Bureau of Economic Research (NBER)

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Yale University - Cowles Foundation

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Nicolas Williams

University of Cincinnati - Department of Economics ( email )

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