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Tenure, Experience, Human Capital and Wages: A Tractable Equilibrium Search Model of Wage Dynamics

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  • Jesper Bagger
  • François Fontaine

    (Bureau d'économie théorique et appliquée (BETA))

  • Fabien Postel-Vinay

    (Department of Economics)

  • Jean-Marc Robin

    (Département d'économie)

Abstract

We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks. Monthly wage growth is decomposed into the contributions of human capital and job search, within and between jobs. Human capital accumulation is found to be the most important source of wage growth in early phases of workers’ careers, but is soon surpassed by search-induced wage growth. Conventional measures of the returns to tenure hide substantial heterogeneity between different workers in the same firm and between similar workers in different firms.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/eu4vqp9ompqllr09j0045h4bh.

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Date of creation: Aug 2011
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Handle: RePEc:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09j0045h4bh

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References

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  1. Giuseppe Moscarini & Fabien Postel-Vinay, 2010. "Stochastic Search Equilibrium," Cowles Foundation Discussion Papers 1754, Cowles Foundation for Research in Economics, Yale University.
  2. Topel, Robert H & Ward, Michael P, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 439-79, May.
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  4. Postel-Vinay, Fabien & Robin, Jean-Marc, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," CEPR Discussion Papers 3548, C.E.P.R. Discussion Papers.
  5. Fabien Postel-Vinay & Hélène Turon, 2010. "On-The-Job Search, Productivity Shocks, And The Individual Earnings Process," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(3), pages 599-629, 08.
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  9. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, 03.
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Citations

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Cited by:
  1. David Lagakos & Benjamin Moll & Tommaso Porzio & Nancy Qian, 2012. "Experience Matters: Human Capital and Development Accounting," NBER Working Papers 18602, National Bureau of Economic Research, Inc.
  2. Jesper Bagger & Rasmus Lentz, 2014. "An Empirical Model of Wage Dispersion with Sorting," NBER Working Papers 20031, National Bureau of Economic Research, Inc.
  3. Petra Marotzke, 2014. "Job Search and the Age-Inequality Profile," Working Paper Series of the Department of Economics, University of Konstanz 2014-06, Department of Economics, University of Konstanz.
  4. Jean-Marc Robin & Costas Meghir & Jeremy Lise, 2009. "Matching, Sorting and Wages," 2009 Meeting Papers 180, Society for Economic Dynamics.
  5. Bowlus, Audra J. & Liu, Huju, 2013. "The contributions of search and human capital to earnings growth over the life cycle," European Economic Review, Elsevier, vol. 64(C), pages 305-331.
  6. John Kennes & Daniel le Maire, 2013. "Job Heterogeneity and Coordination Frictions," Economics Working Papers 2013-09, School of Economics and Management, University of Aarhus.
  7. Torben Sørensen & Rune Vejlin, 2013. "The importance of worker, firm and match effects in the formation of wages," Empirical Economics, Springer, vol. 45(1), pages 435-464, August.
  8. Anna Zaharieva, 2013. "On-the-job search and optimal schooling under uncertainty and irreversibility," Working Papers 492, Bielefeld University, Center for Mathematical Economics.
  9. Lance Lochner & Youngki Shin, 2014. "Understanding Earnings Dynamics: Identifying and Estimating the Changing Roles of Unobserved Ability, Permanent and Transitory Shocks," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20142, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  10. Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2013. "Mismatch, Sorting and Wage Dynamics," NBER Working Papers 18719, National Bureau of Economic Research, Inc.
  11. repec:spo:wpecon:info:hdl:2441/6ggbvnr6munghes9od0s108ro is not listed on IDEAS
  12. Rasmus Lentz, 2014. "Optimal Employment Contracts with Hidden Search," NBER Working Papers 19988, National Bureau of Economic Research, Inc.
  13. Gregory Veramendi, 2012. "Labor Market Dynamics: A Model of Search and Human Capital Accumulation," 2012 Meeting Papers 1059, Society for Economic Dynamics.
  14. Marotzke, Petra, 2013. "Job Search and the Age-Inequality Profile," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80007, Verein für Socialpolitik / German Economic Association.
  15. Jesper Bagger & Rasmus Lentz, 2014. "An Empirical Model of Wage Dispersion with Sorting," Economics Working Papers 2014-11, School of Economics and Management, University of Aarhus.

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