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The Link between Ability and Specialization: An Explanation for Observed Correlations between Wages and Mobility Rates

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  • Derek Neal
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    Abstract

    Wage levels and turnover rates are negatively correlated across types of employment, and this fact is often interpreted as evidence that high-wage jobs are rationed. A simple training model illustrates, however, that this correlation may arise because able workers have an incentive to choose highly specialized jobs. In any job, the most able workers possess the most valuable stocks of specific skills and therefore face the highest mobility costs. Thus, able workers may have a comparative advantage in specialized employments. Data from the national Longitudinal Survey of Youth provide an opportunity to evaluate the merits of the training model developed here. Data on worker training and mobility provide support for several implications of the model. The model also provides new ways to interpret existing results in the literature on interindustry wage differentials.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 33 (1998)
    Issue (Month): 1 ()
    Pages: 173-200

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    Handle: RePEc:uwp:jhriss:v:33:y:1998:i:1:p:173-200

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Pinheiro, Roberto B. & Visschers, Ludo, 2012. "Unemployment risk and wage differentials," MPRA Paper 36907, University Library of Munich, Germany.
    2. Oreopoulos, Philip & Wachter, Till von & Heisz, Andrew, 2008. "The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates," IZA Discussion Papers 3578, Institute for the Study of Labor (IZA).
    3. Peter Dolton & Gerald Makepeace & Oscar Marcenaro-Gutierrez, 2005. "Career progression: Getting-on, getting-by and going nowhere," Education Economics, Taylor & Francis Journals, vol. 13(2), pages 237-255.
    4. Bernd Fitzenberger & Alexandra Spitz, 2004. "Die Anatomie des Berufswechsels : eine empirische Bestandsaufnahme auf Basis der BIBB/IAB-Daten 1998/1999," Working Papers of the Research Group Heterogenous Labor 04-02, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
    5. Phimister, Euan & Theodossiou, Ioannis & Upward, Richard, 2004. "Is It Easier To Escape From Low Pay In Urban Areas? Evidence From The Uk," Discussion Papers 31790, University of Aberdeen Business School, Centre for European Labour Market Research (CELMR).
    6. Wachter, Till von & Bender, Stefan, 2004. "In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers," IZA Discussion Papers 1348, Institute for the Study of Labor (IZA).
    7. Christopher H. Wheeler, 2007. "Local market scale and the pattern of job changes among young men," Working Papers 2005-033, Federal Reserve Bank of St. Louis.
    8. Lex Borghans & Bart Golsteyn, 2007. "Skill transferability, regret and mobility," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1663-1677.
    9. David Seim, 2012. "Job displacement and labor market outcomes by skill level," Bank of Estonia Working Papers wp2012-4, Bank of Estonia.
    10. Pekka Ilmakunnas & Mika Maliranta, 2005. "Worker inflow, outflow, and churning," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1115-1133.
    11. Zuckerman, Ezra W. & Kim, Tai-Young & Ukanwa, Kalinda & James, von Rittmann, 2003. "Robust Identities or Non-Entities? Typecasting in the Feature Film Labor Market," Working papers 4291-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.

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