Interfirm Mobility, Wages, and the Returns to Seniority and Experience in the U.S.

63 Pages Posted: 23 Feb 2005

See all articles by Moshe Buchinsky

Moshe Buchinsky

University of California, Los Angeles (UCLA) - Department of Economics; National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); National Bureau of Economic Research (NBER)

Denis Fougère

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Center for Scientific Research (CNRS); IZA Institute of Labor Economics

Francis Kramarz

Independent

Rusty Tchernis

Georgia State University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: March 2008

Abstract

Much of the research in labor economics during the 1980s and the early 1990s was devoted to the analysis of changes in the wage structure across many of the world's economies. Only recently, has research turned to the analysis of mobility in its various guises. From the life cycle perspective, decreased wage mobility and increased job instability, makes the phenomenon of increasing wage inequality more severe than it appears to be at first sight. In general, workers' wages may change through two channels: (a) return to their firm-specific human capital (seniority); or (b) inter-firm wage mobility. Our theoretical model gives rise to three equations: (1) a participation equation; (2) a wage equation; and (3) an interfirm mobility equation. In this model the wage equation is estimated simultaneously with the two decision equations. We use the Panel Study of Income Dynamics (PSID) to estimate the model for three education groups. Our main finding is that returns to seniority are quite high for all education groups. On the other hand, the returns to experience appear to be similar to those previously found in the literature.

Suggested Citation

Buchinsky, Moshe and Fougere, Denis and Kramarz, Francis and Tchernis, Rusty, Interfirm Mobility, Wages, and the Returns to Seniority and Experience in the U.S. (March 2008). IZA Discussion Paper No. 1521, CAEPR Working Paper No. 2008-006, Available at SSRN: https://ssrn.com/abstract=671022

Moshe Buchinsky (Contact Author)

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Denis Fougere

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Francis Kramarz

Independent

Rusty Tchernis

Georgia State University - Department of Economics ( email )

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United States

HOME PAGE: http://www2.gsu.edu/~ecort

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

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

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