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Wage premia for newly hired employees

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  • Kampkötter, Patrick
  • Sliwka, Dirk

Abstract

We investigate wage differences between newly hired and incumbent employees in identical functions using detailed personnel data from a large number of banks. We first show in a formal model of job switching that (i) incumbents earn less than new recruits when human capital is mostly general but (ii) the opposite is the case if specific human capital is sufficiently important. In the empirical analysis we find that, on average, new hires earn more than comparable incumbents but – using a novel measure for the importance of specific human capital – these wage premia indeed strongly depend on human capital specificity.

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  • Kampkötter, Patrick & Sliwka, Dirk, 2014. "Wage premia for newly hired employees," Labour Economics, Elsevier, vol. 31(C), pages 45-60.
    • Handle: RePEc:eee:labeco:v:31:y:2014:i:c:p:45-60
    DOI: 10.1016/j.labeco.2014.09.001
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    3. Eric W. Chan & Jeremy B. Lill & Victor S. Maas, 2023. "Promote Internally or Hire Externally? The Role of Gift Exchange and Performance Measurement Precision," Journal of Accounting Research, Wiley Blackwell, vol. 61(2), pages 493-530, May.
    4. Timothy N. Bondtn, 2017. "Internal Labor Markets in Equilibrium," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 33(1), pages 28-67.
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    6. Annekatrin Niebuhr & Jan Cornelius Peters, 2020. "Workforce Composition and Individual Wages — An Employer–Employee Data Analysis," British Journal of Industrial Relations, London School of Economics, vol. 58(3), pages 719-742, September.
    7. Oz Shy & Rune Stenbacka, 2019. "Anti‐Poaching Agreements In Labor Markets," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 243-263, January.

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    More about this item

    Keywords

    Wages; Job mobility; Wage premia; Specific human capital; New hires;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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