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Labor market dynamics in a highly competitive industry

Author

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  • Principe, Francesco
  • van Ours, Jan C.

Abstract

We study labor market dynamics of workers in a highly competitive industry with a highly competitive labor market. We focus on the relationship between workers’ age, wages, and productivity. Our analysis uncovers an inverse U-shaped relationship. While some wage adjustments occur within the current firm, job mobility plays a crucial role in shaping wage trajectories. There is assortative matching with highly productive workers moving to highly productive firms, while less productive workers gravitate towards less productive firms. Our findings suggest that both in-firm wage progression and wage growth via job mobility contribute to a close alignment between wages and productivity throughout workers’ careers.

Suggested Citation

  • Principe, Francesco & van Ours, Jan C., 2026. "Labor market dynamics in a highly competitive industry," Labour Economics, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:labeco:v:98:y:2026:i:c:s0927537125001691
    DOI: 10.1016/j.labeco.2025.102845
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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