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Enriching a Theory of Wage and Promotion Dynamics Inside Firms

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  • Robert Gibbons
  • Michael Waldman

Abstract

In previous work we showed that a model that integrates job assignment, human-capital acquisition, and learning can explain several empirical findings concerning wage and promotion dynamics inside firms. In this paper we extend that model in two ways. First, we incorporate schooling into the model and derive a number of testable implications that we then compare with the available empirical evidence. Second, and more important, we show that introducing task-specific' human capital allows us to produce cohort effects (i.e., the finding that a cohort that enters a firm at a low wage will continue to earn below-average wages years later). We argue that task-specific human capital is a realistic concept and may have many important implications. We also discuss limitations of our (extended) approach.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9849.

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Date of creation: Jul 2003
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Handle: RePEc:nbr:nberwo:9849

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Cited by:
  1. Dan Bernhardt & Steeve Mongrain, 2010. "The Layoff Rat Race," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(1), pages 185-210, 03.
  2. Facundo Sepulveda & Fabio Mendez, 2011. "The cyclicality of skill acquisition: evidence from panel data," CAMA Working Papers 2011-13, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  3. Uta Schoenberg & Christina Gathmann, 2006. "How General is Specific Human Capital? Using Mobility Patterns to Study Skill Transferability in the Labor Market," 2006 Meeting Papers 598, Society for Economic Dynamics.
  4. Kahn, Lisa B. & Lange, Fabian, 2010. "Employer Learning, Productivity and the Earnings Distribution: Evidence from Performance Measures," IZA Discussion Papers 5054, Institute for the Study of Labor (IZA).
  5. Frederiksen, Anders & Halliday, Timothy J. & Koch, Alexander K., 2010. "What Do We Work For? An Anatomy of Pre- and Post-Tax Earnings Growth," IZA Discussion Papers 5298, Institute for the Study of Labor (IZA).
  6. Thiele, Veikko, 2010. "Task-specific abilities in multi-task principal-agent relationships," Labour Economics, Elsevier, vol. 17(4), pages 690-698, August.
  7. Frederiksen, Anders & Halliday, Timothy J. & Koch, Alexander K., 2010. "Within- and Cross-Firm Mobility and Earnings Growth," IZA Discussion Papers 5163, Institute for the Study of Labor (IZA).
  8. Carr, Michael D., 2011. "Work hours and wage inequality: Evidence from the 2004 WERS," The Journal of Socio-Economics, Elsevier, vol. 40(4), pages 417-427, August.
  9. Kaiser, Ulrich & Malchow-Møller, Nikolaj, 2011. "Is self-employment really a bad experience?: The effects of previous self-employment on subsequent wage-employment wages," Journal of Business Venturing, Elsevier, vol. 26(5), pages 572-588, September.
  10. Frederiksen, Anders & Kato, Takao, 2011. "Human Capital and Career Success: Evidence from Linked Employer-Employee Data," IZA Discussion Papers 5764, Institute for the Study of Labor (IZA).

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