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Do Wages Rise with Job Seniority? The Swiss Case

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  • Cornelia Luchsinger
  • Rafael Lalive
  • Jörg Wild

Abstract

Whether or not seniority has a substantial effect on wages has been the subject of much controversy. ALTONJI and SHAKOTKO (1987) and TOPEL (1991) have put forward different empirical strategies to deal with unobserved heterogeneity. Their methods yield different results for the U.S. labor market. Different methods in controlling economy wide time trends are being identified as one of the main reasons for this finding. In this paper, we apply these methods on Swiss data. We find that returns to tenure are lower than in the U.S., and that differences between the two methodological approaches are minor with our data sample. The wage stagnation during the observation period rules out the possibility of different detrending methods as being the main reason for differences in the estimators.

Suggested Citation

  • Cornelia Luchsinger & Rafael Lalive & Jörg Wild, 2003. "Do Wages Rise with Job Seniority? The Swiss Case," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(II), pages 207-229, June.
  • Handle: RePEc:ses:arsjes:2003-ii-4
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    References listed on IDEAS

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    1. Kevin M. Murphy & Finis Welch, 1992. "The Structure of Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 285-326.
    2. Joseph G. Altonji & Nicolas Williams, 2005. "Do Wages Rise with Job Seniority? A Reassessment," ILR Review, Cornell University, ILR School, vol. 58(3), pages 370-397, April.
    3. Christian Dustmann & Costas Meghir, 2005. "Wages, Experience and Seniority," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 77-108.
    4. Orley Ashenfelter & Cecilia Rouse, 1998. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 253-284.
    5. Manning, Alan, 1998. "Mighty good thing: the returns to tenure," LSE Research Online Documents on Economics 20291, London School of Economics and Political Science, LSE Library.
    6. Williams, Nicolas, 1991. "Reexamining the Wage, Tenure and Experience Relationship," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 512-517, August.
    7. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    8. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 979-1014.
    9. Griliches, Zvi, 1979. "Sibling Models and Data in Economics: Beginnings of a Survey," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 37-64, October.
    10. Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-176, February.
    11. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-297, June.
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    Citations

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    Cited by:

    1. Robert Orlowski & Regina T. Riphahn, 2009. "The East German wage structure after transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(4), pages 629-659, October.
    2. Marco Semadeni, 2003. "Energy storage as an essential part of sustainable energy systems," CEPE Working paper series 03-24, CEPE Center for Energy Policy and Economics, ETH Zurich.
    3. Robert Orlowski & Regina T. Riphahn, 2007. "Seniority in Germany: New Evidence on Returns to Tenure for Male Full-time Workers," Working Papers 036, Bavarian Graduate Program in Economics (BGPE).
    4. Marco Semadeni, 2002. "Long-Term Energy Scenarios: Information on Aspects of Sustainable Energy Supply as a Prelude to Participatory Sessions," CEPE Working paper series 02-17, CEPE Center for Energy Policy and Economics, ETH Zurich.
    5. Florian Zainhofer, 2007. "Life Cycle Portfolio Choice: A Swiss Perspective," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(II), pages 187-238, June.
    6. Daniel Spreng & Marco Semadeni, 2001. "Energie, Umwelt und die 2000 Watt Gesellschaft," CEPE Working paper series 01-11, CEPE Center for Energy Policy and Economics, ETH Zurich.
    7. Silvia Banfi & Massimo Filippini & Andrea Horehájová, 2007. "Hedonic Price Functions for Zurich and Lugano with Special Focus on Electrosmog," CEPE Working paper series 07-57, CEPE Center for Energy Policy and Economics, ETH Zurich.
    8. Eberhard Jochem, 2005. "An Agenda for Energy and Material Efficiency Policy – An Element of Technology Policy for a More Sustainable Use of Natural Resources," CEPE Working paper series 05-40, CEPE Center for Energy Policy and Economics, ETH Zurich.

    More about this item

    Keywords

    human capital; returns to experience; returns to tenure;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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