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Job Duration, Seniority and Earnings

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  • Katharine G. Abraham
  • Henry S. Farber

Abstract

An important stylized fact about labor markets is that workers with longer seniority with their current employer have higher earnings than other workers with the same total labor market experience. This study shows that workers in longer jobs earn more throughout than workers in a series of shorter jobs and that the measured positive cross-sectional return seniority is largely a statistical artifact due to the correlation of seniority with an omitted variable representing the quality of the worker, the job, or the worker-employer match. The implication is tha t earnings do not, in fact, rise very much with seniority. Copyright 1987 by American Economic Association.

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Bibliographic Info

Paper provided by Massachusetts Institute of Technology (MIT), Department of Economics in its series Working papers with number 407.

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Date of creation: Jan 1986
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Handle: RePEc:mit:worpap:407

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Web page: http://econ-www.mit.edu/
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Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
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  1. E.K. Berndt & B.H. Hall & R.E. Hall, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 103-116 National Bureau of Economic Research, Inc.
  2. Robert E. Hall, 1984. "The Importance of Lifetime Jobs in the U.S. Economy," NBER Working Papers 0560, National Bureau of Economic Research, Inc.
  3. Katharine G. Abraham & James L. Medoff, 1983. "Length of Service and the Operation of Internal Labor Markets," NBER Working Papers 1085, National Bureau of Economic Research, Inc.
  4. Joseph Altonji & R. Shakotko, 1985. "Do Wages Rise with Job Seniority?," Working Papers 567, Princeton University, Department of Economics, Industrial Relations Section..
  5. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  6. repec:fth:prinin:187 is not listed on IDEAS
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