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Industry-Specific Capiatl and the Wage Profile: Evidence from the NLSY and the PSID

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  • Parent, D.

Abstract

Using data from the NLSY (1979-1991) and from the Panel Study of Income Dynamics (PSID, 1981-1987), we seek to determine whether there is any net positive return to tenure with the current employer once we control for industry-specific capital. Using data from the PSID, Topel (JPE 1991) concluded that 10 years of seniority with an employer translated into a net return of about 25%. However, once we include total experience in the industry as an additional explanatory variable, the return to seniority vanishes almost completely when we use either OLS, GLS or IV-GLS estimation methods, although this conclusion varies somewhat according to the occupation, some occupation classes showing a negative net return to tenure and others showing a positive net return. Note also that this result holds whether the analysis is carried out at the 1-digit, 2-digit or 3-digit level. Therefore, it seems that what matters most for the wage profile in terms of human capital is not so much firm-specificity but industry-specificity. Avec les données du NLSY ainsi que celles du Panel Study of Income Dynamics (PSID), on cherche à déterminer s'il y a un rendement positif net lié à l'ancienneté dans la firme. Topel (JPE 1991) a montré avec un échantillon du PSID l'existence d'un rendement substantiel (25 % en 10 ans). Toutefois, du moment que l'on inclut l'expérience dans l'industrie courante dans l'équation de salaire (en plus de l'ancienneté dans la firme ainsi que l'expérience totale de travail), l'effet d'ancienneté disparaît presque complètement, que l'on estime par simples moindres carrés généralisés ou par la méthode des variables instrumentales (IV-GLS), et ce, avec les deux échantillons différents. ¸ noter également que ce résultat est robuste au degré d'agrégation des classes d'industries.

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Bibliographic Info

Paper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 9508.

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Length: 19 pages
Date of creation: 1995
Date of revision:
Handle: RePEc:mtl:montec:9508

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Keywords: HUMAN RESOURCES; INDUSTRY;

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  1. Jovanovic, Boyan, 1979. "Firm-specific Capital and Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1246-60, December.
  2. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority and Earnings," Working papers 407, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Altonji, Joseph G & Shakotko, Robert A, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 437-59, July.
  5. MacLeod, W Bentley & Malcomson, James M, 1993. "Investments, Holdup, and the Form of Market Contracts," American Economic Review, American Economic Association, vol. 83(4), pages 811-37, September.
  6. 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.
  7. MacLeod, W.B. & Malcomson, J.M., 1992. "Specific investment and wage profiles in labour markets," Discussion Paper Series In Economics And Econometrics 9228, Economics Division, School of Social Sciences, University of Southampton.
  8. Finnie, R., 1993. "Tenure Experience, and Men's and Women's Wages: Panel Estimates from the National Longitudinal Survey of Youth," Papers 9305, Laval - Recherche en Politique Economique.
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