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Wage changes through job mobility in Europe: A multinomial endogenous switching approach

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Author Info
José Ignacio García Pérez () (Centro de Estudios Andaluces y Universidad Pablo de Olavide)
Yolanda Rebollo Sanz () (Universidad Pablo de Olvide)

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Abstract

This paper presents evidence on the relationship between job mobility and wage mobility for some European countries using the European Community Household Panel (1994- 2001). While much of the earlier research uses least-squares regression to predict wages for individuals with different work experience, we find that it is important to take account of possible non-random selection between job movers and job stayers and between voluntary and involuntary movers. In this paper we focus on the effects of a spell of unemployment on subsequent wages by estimating a multinomial endogenous switching model composed of two selection equations and three wage equations. Our results indicate that job mobility through unemployment has negative returns in all the analysed economies. Relative to stayers, these losses range from 5% in Portugal to 22% in Germany.

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Publisher Info
Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/70.

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Length: 35 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:cea:doctra:e2004_70

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Related research
Keywords: wage mobility; job mobility; unemployment; endogenous switching; multinomial probit; wage penalties;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ann P. Bartel & George J. Borjas, 1982. "Wage Growth and Job Turnover: An Empirical Analysis," NBER Working Papers 0285, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Mortensen, Dale T, 1988. "Wages, Separations, and Job Tenure: On-the-Job Specific Training or Matching?," Journal of Labor Economics, University of Chicago Press, vol. 6(4), pages 445-71, October. [Downloadable!] (restricted)
  3. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September. [Downloadable!] (restricted)
    Other versions:
  4. Burda, Michael C. & Mertens, Antje, 2001. "Estimating wage losses of displaced workers in Germany," Labour Economics, Elsevier, vol. 8(1), pages 15-41, January. [Downloadable!] (restricted)
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  5. Weeks, Melvyn, 1997. " The Multinomial Probit Model Revisited: A Discussion of Parameter Estimability, Identification and Specification Testing," Journal of Economic Surveys, Blackwell Publishing, vol. 11(3), pages 297-320, September. [Downloadable!] (restricted)
  6. Dansie, B. R., 1985. "Parameter estimability in the multinomial probit model," Transportation Research Part B: Methodological, Elsevier, vol. 19(6), pages 526-528, December. [Downloadable!] (restricted)
  7. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January. [Downloadable!] (restricted)
  8. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May. [Downloadable!] (restricted)
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  9. Anabela Carneiro & Pedro Portugal, 2006. "Earnings Losses of Displaced Workers: Evidence from a Matched Employer-Employee Data Set," IZA Discussion Papers 2289, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Garcia-Perez, J.I., 1998. "Non-Stationary Job Search with Firing: a Structural Estimation," Papers 9802, Centro de Estudios Monetarios Y Financieros-.
  11. Pissarides, Christopher A, 1992. "Loss of Skill during Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, MIT Press, vol. 107(4), pages 1371-91, November. [Downloadable!] (restricted)
  12. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-76, February. [Downloadable!] (restricted)
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  13. Stern, Steven, 1989. "Rules of thumb for comparing multinomial logit and multinomial probit coefficients," Economics Letters, Elsevier, vol. 31(3), pages 235-238, December. [Downloadable!] (restricted)
  14. Arulampalam, Wiji, 2001. "Is Unemployment Really Scarring? Effects of Unemployment Experiences on Wages," Economic Journal, Royal Economic Society, vol. 111(475), pages F585-606, November. [Downloadable!] (restricted)
    Other versions:
  15. Alfonso Rosolia & Gilles Saint Paul, 1998. "The Effect of Unemployment Spells on Subsequent Wages in Spain," Economics Working Papers 295, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  16. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December. [Downloadable!] (restricted)
  17. Arnaud Lefranc, 2000. "Wage Losses of Displaced Workers in France and the US?," Econometric Society World Congress 2000 Contributed Papers 1566, Econometric Society. [Downloadable!]
  18. Loprest, Pamela J, 1992. "Gender Differences in Wage Growth and Job Mobility," American Economic Review, American Economic Association, vol. 82(2), pages 526-32, May. [Downloadable!] (restricted)
  19. Holmlund, Bertil & Zetterberg, Johnny, 1991. "Insider effects in wage determination : Evidence from five countries," European Economic Review, Elsevier, vol. 35(5), pages 1009-1034, July. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Maite Blázquez, 2009. "Earnings mobility in Spain: the role of job mobility and contractual arrangements," Spanish Economic Review, Springer, vol. 11(3), pages 179-205, September. [Downloadable!] (restricted)
  2. repec:ese:iserwp: is not listed on IDEAS
  3. Anne C. Gielen & Jan C. van Ours, 2006. "Why Do Worker-Firm Matches Dissolve?," IZA Discussion Papers 2165, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Gielen, Anne C., 2008. "Repeated Job Quits: Stepping Stones or Learning about Quality?," IZA Discussion Papers 3838, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Pavlopoulos, Dimitris & Fouarge, Didier & Muffels, Ruud & Vermunt, Jeroen K., 2007. "Who benefits from a job change: The dwarfs or the giants?," IRISS Working Paper Series 2007-16, IRISS at CEPS/INSTEAD. [Downloadable!]
  6. Sarah Brown & Jenny Roberts & Karl Taylor, 2008. "Reservation Wages, Labour Market Participation And Health," Working Papers 2008002, The University of Sheffield, Department of Economics, revised Feb 2008. [Downloadable!]
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