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Wage Growth and Job Mobility in the U.K. and Germany

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  • Dustmann, Christian

    ()
    (University College London)

  • Pereira, Sonia C.

    ()
    (University College London)

Abstract

This paper investigates job mobility and estimates the returns to tenure and experience in the United Kingdom and Germany. We show evidence that job mobility is higher in the UK than in Germany, and that job movers may be negatively selected in Germany, but not in the UK. Our findings suggest that returns to experience are substantially higher in the UK. According to our estimates, ten years of labour market experience are associated with average wage returns of around 70 percent in the UK and 30 percent in Germany. Separate estimates for different qualification groups show that in Germany, it is the group of workers with apprenticeship training that is driving the low returns to labour market experience, while wages growth due to labour market experience is similar between the two countries for the other skill groups. Furthermore, returns to tenure are close to zero in both countries, while wage growth due to the macro trend is markedly higher in Germany.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1586.

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Length: 47 pages
Date of creation: May 2005
Date of revision:
Publication status: published in: Industrial and Labor Relations Review, 2008, 61 (3), 374 - 393
Handle: RePEc:iza:izadps:dp1586

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Keywords: returns to seniority; job mobility; asymmetric information;

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References

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  1. Francine D. Blau & Lawrence M. Kahn, 1994. "International Differences in Male Wage Inequality: Institutions versus Market Forces," NBER Working Papers 4678, National Bureau of Economic Research, Inc.
  2. Acemoglu, D. & Pischki, J.S., 1996. "Why Do Firms Train? Theory and Evidence," Working papers 96-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority, and Earnings," NBER Working Papers 1819, National Bureau of Economic Research, Inc.
  4. Joseph G. Altonji & Nicolas Williams, 1992. "The Effects of Labor Market Experience, Job Seniority, and Job Mobility on Wage Growth," NBER Working Papers 4133, National Bureau of Economic Research, Inc.
  5. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(3), pages 437-59, July.
  6. Acemoglu, Daron & Pischke, Jörn-Steffen, 1998. "The Structure of Wages and Investment in General Training," CEPR Discussion Papers 1833, C.E.P.R. Discussion Papers.
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Cited by:
  1. Koch, Alexander K. & Peyrache, Eloïc, 2008. "Moral hazard contracts: Does one size fit all?," Economics Letters, Elsevier, vol. 100(3), pages 399-401, September.
  2. Gielen, Anne C. & van Ours, Jan C., 2006. "Why Do Worker-Firm Matches Dissolve?," IZA Discussion Papers 2165, Institute for the Study of Labor (IZA).
  3. Piekkola, Hannu, 2006. "Tax cuts and employment: Evidence from Finnish linked employer-employee data," Discussion Papers, The Research Institute of the Finnish Economy 1041, The Research Institute of the Finnish Economy.
  4. Koch, Alexander K. & Peyrache, Eloic, 2005. "Aligning Ambition and Incentives," IZA Discussion Papers 1527, Institute for the Study of Labor (IZA).
  5. Roland A. Amann & Tobias J. Klein, 2012. "Returns to type or tenure?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 175(1), pages 153-166, 01.
  6. Koch, Alexander K. & Peyrache, Eloic, 2005. "Tournaments, Individualized Contracts and Career Concerns," IZA Discussion Papers 1841, Institute for the Study of Labor (IZA).
  7. Vincenzo Andrietti & Eleonora Patacchini, 2004. "Occupationa Pensions, Wages And Tenure Wage Profiles," Economics Working Papers we043612, Universidad Carlos III, Departamento de Economía.

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