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Individual Wage Growth: The Role of Industry Experience

  • Michele Battisti

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This paper focuses on the effect of experience within an industry on wages. I use a correlated random effects simultaneous equation model that allows individual and match heterogeneity to affect wages, job tenure and industry experience. I estimate my model separately for men and women using a large panel of young Italian workers for the years 1986–2004. Results show that wage returns to industry experience are much higher than wage returns to job seniority. The hypotheses of exogeneity of job seniority and industry experience in the wage equation are rejected: high-wage workers and highwage matches last longer.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2013/IfoWorkingPaper-152.pdf
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Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 152.

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Date of creation: 2013
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Handle: RePEc:ces:ifowps:_152
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  1. Joseph G. Altonji & Anthony Smith & Ivan Vidangos, 2009. "Modeling Earnings Dynamics," NBER Working Papers 14743, National Bureau of Economic Research, Inc.
  2. Benoit Dostie, 2004. "Job Turnover and the Returns to Seniority," Econometric Society 2004 North American Winter Meetings 127, Econometric Society.
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  5. Woodcock, Simon, 2006. "Wage Differentials in the Presence of Unobserved Worker, Firm, and Match Heterogeneity," MPRA Paper 1341, University Library of Munich, Germany.
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  8. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
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  11. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
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  14. Jovanovic, Boyan, 1984. "Matching, Turnover, and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 108-22, February.
  15. repec:inr:wpaper:155908 is not listed on IDEAS
  16. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Universite de Montreal, Departement de sciences economiques.
  17. Roberto Leombruni & Roberto Quaranta, 2011. "La codifica di settore in WHIP. Problemi correnti e studio di un algoritmo di ricostruzione della codifica Ateco 2002," LABORatorio R. Revelli Whip Technical Reports 02, LABORatorio R. Revelli, Centre for Employment Studies.
  18. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-97, June.
  19. Thomas Cornelißen & Olaf Hübler, 2011. "Unobserved Individual and Firm Heterogeneity in Wage and Job‐Duration Functions: Evidence from German Linked Employer–Employee Data," German Economic Review, Verein für Socialpolitik, vol. 12(4), pages 469-489, November.
  20. Cingano, Federico, 2003. "Returns to specific skills in industrial districts," Labour Economics, Elsevier, vol. 10(2), pages 149-164, April.
  21. Michael Peters, 2010. "Noncontractible Heterogeneity in Directed Search," Econometrica, Econometric Society, vol. 78(4), pages 1173-1200, 07.
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