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Earnings Functions, Specific Human Capital, and Job Matching: Tenure Bias Is Negative

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  • Margaret Stevens

    (Oxford University and Lincoln College, Oxford)

Abstract

This article investigates the hypothesis that when measures of specific human capital (such as job tenure) are included in earnings functions, there may be a sample selection bias because of job-matching effectsbecause workers with high unobserved match quality receive and accept high wage offers. We develop a model for wage offers in a labor market characterized by both specific human capital and job matching. The model provides a theoretical basis for empirical earnings functions containing specific capital, and it demonstrates that sample selection bias reduces the estimated return to specific human capital and tenure.

Suggested Citation

  • Margaret Stevens, 2003. "Earnings Functions, Specific Human Capital, and Job Matching: Tenure Bias Is Negative," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 783-806, October.
    • Handle: RePEc:ucp:jlabec:v:21:y:2003:i:4:p:783-806
    DOI: 10.1086/376958
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    References listed on IDEAS

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    1. Caplin, Andrew & Nalebuff, Barry, 1991. "Aggregation and Social Choice: A Mean Voter Theorem," Econometrica, Econometric Society, vol. 59(1), pages 1-23, January.
    2. Rosen, Sherwin, 2007. "Studies in Labor Markets," National Bureau of Economic Research Books, University of Chicago Press, number 9780226726304, December.
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    Cited by:

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    2. Conyon, Martin J. & He, Lerong, 2017. "Firm performance and boardroom gender diversity: A quantile regression approach," Journal of Business Research, Elsevier, vol. 79(C), pages 198-211.
    3. Barmby, Tim & Bryson, Alex & Eberth, Barbara, 2012. "Human capital, matching and job satisfaction," Economics Letters, Elsevier, vol. 117(3), pages 548-551.
    4. Alex Bryson & Babatunde Buraimo & Alex Farnell & Rob Simmons, 2021. "Time To Go? Head Coach Quits and Dismissals in Professional Football," De Economist, Springer, vol. 169(1), pages 81-105, February.
    5. Aviad Tur-Sinai, 2020. "The effect of terror and economic sector in early career years on future career path," Empirical Economics, Springer, vol. 59(5), pages 2153-2184, November.
    6. Ham, Roger & Junankar, Pramod N. (Raja) & Wells, Robert, 2009. "Occupational Choice: Personality Matters," IZA Discussion Papers 4105, Institute of Labor Economics (IZA).
    7. Frederiksen, Anders & Lange, Fabian & Kriechel, Ben, 2017. "Subjective performance evaluations and employee careers," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 408-429.
    8. By Barbara Mueller & Jürg Schweri, 2015. "How specific is apprenticeship training? Evidence from inter-firm and occupational mobility after graduation," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 1057-1077.
    9. Barmby, Tim & Eberth, Barbara, 2008. "Worker turnover and job matching--Implications for estimating the returns to tenure," Economics Letters, Elsevier, vol. 101(2), pages 137-139, November.
    10. Di Addario, Sabrina & Patacchini, Eleonora, 2008. "Wages and the City. Evidence from Italy," Labour Economics, Elsevier, vol. 15(5), pages 1040-1061, October.
    11. Sabrina Di Addario & Eleonora Patacchini, 2006. "Is there an urban wage premium in Italy?," Temi di discussione (Economic working papers) 570, Bank of Italy, Economic Research and International Relations Area.
    12. Juan-Francisco Martínez-Cerdá & Joan Torrent-Sellens & Inés González-González & Pilar Ficapal-Cusí, 2018. "Opening the Black-Box in Lifelong E-Learning for Employability: A Framework for a Socio-Technical E-Learning Employability System of Measurement (STELEM)," Sustainability, MDPI, vol. 10(4), pages 1-27, March.
    13. Mary Gregory & Sara Connolly, 2007. "Part-time Employment Can Be a Life-time Setback for Earnings: A Study of British Women 1975-2001," Economics Series Working Papers 358, University of Oxford, Department of Economics.
    14. Barmby, Tim & Bryson, Alex & Eberth, Barbara, 2012. "Human capital, matching and job satisfaction," Economics Letters, Elsevier, vol. 117(3), pages 548-551.
    15. Sabrina Di Addario & Eleonora Patacchini & University of Rome La Sapienza, 2005. "Wages and the City. The Italian case," Economics Series Working Papers 243, University of Oxford, Department of Economics.

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