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Job Duration, Seniority, and Earnings

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  • Abraham, Katharine G
  • Farber, Henry S

Abstract

An important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience. This study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross-sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker, the job, or the worker-employer match. The implication is tha t earnings do not, in fact, rise very much with seniority. Copyright 1987 by American Economic Association.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 77 (1987)
Issue (Month): 3 (June)
Pages: 278-97

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Handle: RePEc:aea:aecrev:v:77:y:1987:i:3:p:278-97

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  1. Hall, Robert E, 1982. "The Importance of Lifetime Jobs in the U.S. Economy," American Economic Review, American Economic Association, vol. 72(4), pages 716-24, September.
  2. Joseph G. Altonji & Robert A. Shakotko, 1985. "Do Wages Rise With Job Seniority?," NBER Working Papers 1616, National Bureau of Economic Research, Inc.
  3. Katharine G. Abraham & James L. Medoff, 1983. "Length of Service and the Operation of Internal Labor Markets," NBER Working Papers 1085, National Bureau of Economic Research, Inc.
  4. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  5. repec:fth:prinin:187 is not listed on IDEAS
  6. E.K. Berndt & B.H. Hall & R.E. Hall, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 103-116 National Bureau of Economic Research, Inc.
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