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Job Changes and Individual-Job Specific Wage Dynamics

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  • Hospido, Laura

    ()
    (Bank of Spain)

Abstract

This paper develops an error components model that is used to examine the impact of job changes on the dynamics and variance of individual log earnings. I use data on work histories drawn from the Panel Study of Income Dynamics (PSID) that makes it possible to distinguish between voluntary and involuntary job-to-job changes. The potential endogeneity of job mobility in relation to earnings is circumvented by means of an instrument variable estimation method that also allows to control for unobserved individual-job specific heterogeneity. Once controlled for individual and job-specific effects, the persistence within jobs is almost zero, whereas across jobs is significant but small.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5088.

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Length: 25 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5088

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Keywords: panel data; dynamic models; individual-job specific fixed effects; job changes; individual wages;

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  16. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, Econometric Society, vol. 46(5), pages 985-1012, September.
  17. Ann Huff Stevens, 2001. "Changes in earnings instability and job loss," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 60-78, October.
  18. Brown, James N & Light, Audrey, 1992. "Interpreting Panel Data on Job Tenure," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 10(3), pages 219-57, July.
  19. Marshall, Robert C & Zarkin, Gary A, 1987. "The Effect of Job Tenure on Wage Offers," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 5(3), pages 301-24, July.
  20. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(1), pages 145-76, February.
  21. Johnson, William R, 1978. "A Theory of Job Shopping," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 92(2), pages 261-78, May.
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  23. MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, Elsevier, vol. 18(1), pages 83-114, January.
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