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Stepping-stone Jobs: Theory and Evidence


  • Helen Connolly

    (Boston College)

  • Peter Gottschalk

    () (Boston College)


This paper explores the wage and job dynamics of less-skilled workers by estimating a structural model in which agents choose among jobs that differ in initial wage and wage growth. The model also formalizes the intuitive notion that some of these jobs offer "stepping stones" to better jobs. The estimated model assumes that job offers consist of three attributes: an initial wage, an expected wage growth, and an indicator of the distribution from which future offers will come. We derive the conditions under which agents accept these offers and the effect of involuntary terminations on the acceptance decision. This model shows that the probability of leaving an employer depends both on the slope and intercept of the current and offered jobs and the probability of gaining access to the dominant wage offer distribution. We use the SIPP to estimate this model, which allows us to recover parameters of the wage offer distributions and the probability that a job is a stepping stone job. Our empirical work indicates that wage offer distributions vary systematically with the slope and intercept of wages in the current job and that there is a non-zero probability of being offered a stepping stone job.

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  • Helen Connolly & Peter Gottschalk, 2000. "Stepping-stone Jobs: Theory and Evidence," Boston College Working Papers in Economics 427, Boston College Department of Economics, revised 02 Apr 2001.
  • Handle: RePEc:boc:bocoec:427
    Note: This paper was previously circulated under the titles "Wage and Job Dynamics of Less Educated Workers" and "Dead-end and Stepping-stone Jobs: Theory and Evidence"

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    References listed on IDEAS

    1. Robert H. Topel & Michael P. Ward, 1992. "Job Mobility and the Careers of Young Men," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 439-479.
    2. Joseph G. Altonji & Robert A. Shakotko, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 437-459.
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    Cited by:

    1. Gavrel, Frédéric & Lebon, Isabelle & Rebière, Thérèse, 2016. "Formal education versus learning-by-doing: On the labor market efficiency of educational choices," Economic Modelling, Elsevier, vol. 54(C), pages 545-562.
    2. Pedro Portugal & José Varejão, 2004. "Matching Workers to Jobs in the Fast Lane: the Operation of Fixed-term Contracts," Working Papers w200410, Banco de Portugal, Economics and Research Department.
    3. Thérèse REBIÈRE & Frédéric GAVREL & Isabelle LEBON, "undated". "Formal Education Versus Learning-by-doing," EcoMod2009 21500078, EcoMod.
    4. Helen Connolly & Peter Gottschalk, 2001. "Do Earnings Subsidies Affect Job Choice? The Impact of SSP Subsidies on Wage Growth," Boston College Working Papers in Economics 498, Boston College Department of Economics, revised 26 Aug 2006.
    5. Reamonn Lydon & Ian Walker, 2005. "Welfare to work, wages and wage growth," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 335-370, September.

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