Tenure Profiles and Efficient Separation in a Stochastic Productivity Model
This paper provides a new way of analyzing tenure profiles in wages, by modelling simultaneously the evolution of wages and the distribution of tenures. We develop a theoretical model based on efficient bargaining, where both log outside wage and log wage in the current job follow a random walk, as found empirically. This setting allows the application of real option theory. We derive the efficient separation rule. The model fits the observed distribution of job tenures well. Since we observe outside wages only at job start and job separation, our empirical analysis of within job wage growth is based on expected wage growth conditional on the outside wages at both dates. Our modelling allows testing of the efficient bargaining hypothesis. The model is estimated on the PSID.
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- Robert H. Topel & Michael P. Ward, 1988.
"Job Mobility and the Careers of Young Men,"
NBER Working Papers
2649, National Bureau of Economic Research, Inc.
- Robert H. Topel, 1990.
"Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority,"
NBER Working Papers
3294, National Bureau of Economic Research, Inc.
- 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 145-76, February.
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