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The Earnings Function: A Glimpse Inside the Black Box

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  • James L. Medoff

Abstract

This paper studies the wage determination process for a group of managerial employees in a major U.S. airline. As would be expected, those with greater-than-average schooling, pre-company labor market experience, and company service receive greater-than-average earnings. The analysis also addresses the question of whether or not the managers within a grade level who are paid more receive higher performance ratings by their supervisors. The answer is "no" in the case of those with more pre-company labor market experience (i.e., those who are older) and with more company service. This suggests that the salaries received by managers within a grade reflect their age and tenure with the company more than their present performance.

Suggested Citation

  • James L. Medoff, 1978. "The Earnings Function: A Glimpse Inside the Black Box," NBER Working Papers 0224, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0224
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    References listed on IDEAS

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