Earnings-Tenure Profiles: Tests of Agency and Human Capital Theories using Individual Performance Data
AbstractBy using a large new panel of individual data, including objective measures of worker performance, we provide some of the most rigorous evidence to date on several related dimensions of enduring debates surrounding upward-sloping earnings-tenure profiles. Most importantly we provide the first direct test of the relative validity of human capital and agency explanations in accounting for upward-sloping earnings-tenure profiles; our findings strongly support the agency view. Our second area of interest concerns employee ownership (many workers at our case are employee owners.) Consistent with agency theory we find that earnings-tenure profiles for employee owners are not upward-sloping but horizontal. In addition we find that pay-performance sensitivities are substantially weaker for employee owners than for other workers. Finally we investigate the impact of residential policies in China. We find that again consistent with the agency view, earnings-tenure profiles are considerably steeper for urban workers than for migrant workers with far more limited alternative employment opportunities.
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Bibliographic InfoPaper provided by Department of Economics, Colgate University in its series Working Papers with number 104-26.
Date of creation: 12 Oct 2007
Date of revision:
Earnings; Tenure; Seniority; Performance; Human Capital; Agency; Employee Ownership;
Other versions of this item:
- Dong, Xiao-Yuan & Jones, Derek C. & Kato, Takao, 2007. "Earnings-Tenure Profiles: Tests of Agency and Human Capital Theories Using Individual Performance Data," IZA Discussion Papers 3122, Institute for the Study of Labor (IZA).
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
- L6 - Industrial Organization - - Industry Studies: Manufacturing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-19 (All new papers)
- NEP-BEC-2007-12-19 (Business Economics)
- NEP-CNA-2007-12-19 (China)
- NEP-HRM-2007-12-19 (Human Capital & Human Resource Management)
- NEP-LAB-2007-12-19 (Labour Economics)
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