Seniority Rules and Productivity: An Empirical Test
The primary purpose of this paper is to test empirically the effect of labor quality on short-run manufacturing productivity. In doing so, the study makes major advances in two areas. For the first time, a job tenure function is estimated, and a time series of job tenure in manufacturing is developed. This estimated tenure series empirically verifies the use of seniority rules in the firm-worker employment relationship. Having generated a tenure series, the authors then test whether tenure enhances productivity in manufacturing. The results clearly indicate that seniority rules have a statistically significant positive impact on productivity, and the pattern of the seniority rules is reminiscent of a model where human capital has a specific component. Copyright 1989 by The London School of Economics and Political Science.
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Volume (Year): 56 (1989)
Issue (Month): 223 (August)
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