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Enriching a Theory of Wage and Promotion Dynamics inside Firms

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Author Info
Robert Gibbons (Massachusetts Institute of Technology and National Bureau of Economic Research)
Michael Waldman (Cornell University)

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Abstract

In previous work, we showed that a model that integrates job assignment, human capital acquisition, and learning can explain several empirical findings concerning wage and promotion dynamics inside firms. In this article, we extend that model in two ways. First, we incorporate schooling and derive further testable implications that we then compare with the available empirical evidence. Second, and more important, we show that introducing "task-specific" human capital allows us to produce cohort effects. We further argue that task-specific human capital is a realistic concept and may have many important implications. We also discuss limitations of our (extended) approach.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 24 (2006)
Issue (Month): 1 (January)
Pages: 59-108
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Handle: RePEc:ucp:jlabec:v:24:y:2006:i:1:p:59-108

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    Other versions:
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    Other versions:
  7. Paul J. Devereux, 2002. "Occupational Upgrading and the Business Cycle," LABOUR, CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, vol. 16(3), pages 423-452, 09. [Downloadable!] (restricted)
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  11. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October. [Downloadable!] (restricted)
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  12. Baker, Michael, 1997. "Growth-Rate Heterogeneity and the Covariance Structure of Life-Cycle Earnings," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 338-75, April. [Downloadable!] (restricted)
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  26. Parent, Daniel, 2000. "Industry-Specific Capital and the Wage Profile: Evidence from the National Longitudinal Survey of Youth and the Panel Study of Income Dynamics," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 306-23, April. [Downloadable!] (restricted)
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  31. Waldman, Michael, 1990. "Up-or-Out Contracts: A Signaling Perspective," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 230-50, April. [Downloadable!] (restricted)
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  35. MacLeod, W Bentley & Malcomson, James M, 1993. "Investments, Holdup, and the Form of Market Contracts," American Economic Review, American Economic Association, vol. 83(4), pages 811-37, September. [Downloadable!] (restricted)
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