Productivity, Seniority and Wages: New Evidence from Personnel Data
Wages may be observed to increase with seniority because of firm-specific human capital accumulation or because of self-selection of better workers in longer jobs. In both these cases the upward sloping wage profile in cross-sectional regressions would reflect higher productivity of more senior workers. If this were true, the observation of an effect of seniority on wages would depend on the presence of controls for individual productivity. In this paper we replicate, using personnel data from a large Italian firm, the results of the pioneering work of Medoff and Abraham (1980 and 1981) in which supervisors' evaluations were used as productivity indicators. Since the validity of supervisors' evaluations as measures of productivity has been widely criticized, we extend the work of Medoff and Abraham using different direct measures of productivity based on recorded absenteeism and misconduct episodes. Both these indicators and supervisors' evaluation suggest that the observed effect of seniority on wages does not reflect a higher productivity of more senior workers. Theories in which wages are deferred for incentive or insurance reasons are therefore more likely to explain the observed upward sloping profile.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Sep 1998|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ichino, Andrea & Polo, Michele & Rettore, Enrico, 2003.
"Are judges biased by labor market conditions?,"
European Economic Review,
Elsevier, vol. 47(5), pages 913-944, October.
- Katharine G. Abraham & Henry S. Farber, 1986.
"Job Duration, Seniority, and Earnings,"
NBER Working Papers
1819, National Bureau of Economic Research, Inc.
- Booth, Alison L & Frank, Jeff, 1994.
"Seniority, Earnings and Unions,"
CEPR Discussion Papers
1007, C.E.P.R. Discussion Papers.
- Hutchens, Robert M, 1989. "Seniority, Wages and Productivity: A Turbulent Decade," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 49-64, Fall.
- Jacob Mincer & Boyan Jovanovic, 1981.
"Labor Mobility and Wages,"
in: Studies in Labor Markets, pages 21-64
National Bureau of Economic Research, Inc.
- Mincer, Jacob, 1997.
"The Production of Human Capital and the Life Cycle of Earnings: Variations on a Theme,"
Journal of Labor Economics,
University of Chicago Press, vol. 15(1), pages S26-47, January.
- Jacob Mincer, 1994. "The Production of Human Capital and the Lifecycle of Earnings: Variations on a Theme," NBER Working Papers 4838, National Bureau of Economic Research, Inc.
- Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
- Robert Gibbons, 1996. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc.
- Christopher L. Erikson & Andrea Ichino, 1994.
"Wage Differentials in Italy: Market Forces, Institutions, and Inflation,"
NBER Working Papers
4922, National Bureau of Economic Research, Inc.
- Christopher Erickson & Andrea Ichino, 1995. "Wage Differentials in Italy: Market Forces, Institutions, and Inflation," NBER Chapters, in: Differences and Changes in Wage Structures, pages 265-306 National Bureau of Economic Research, Inc.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
- James L. Medoff & Katharine G. Abraham, 1981. "Are Those Paid More Really More Productive? The Case of Experience," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 186-216.
- repec:oup:qjecon:v:95:y:1980:i:4:p:703-36 is not listed on IDEAS
- Bishop, John, 1987. "The Recognition and Reward of Employee Performance," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages S36-56, October.
- Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Felli, Leonardo & Harris, Christopher, 1996. "Learning, Wage Dynamics, and Firm-Specific Human Capital," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 838-68, August.
- 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.
- repec:oup:qjecon:v:109:y:1994:i:4:p:881-919 is not listed on IDEAS
- Joseph G. Altonji & Nicolas Williams, 2005.
"Do wages rise with job seniority? A reassessment,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 58(3), pages 370-397, April.
- 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.
- Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
- repec:oup:restud:v:49:y:1982:i:3:p:315-33 is not listed on IDEAS
- Carmichael, H Lorne, 1989. "Self-Enforcing Contracts, Shirking, and Life Cycle Incentives," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 65-83, Fall.
- repec:oup:restud:v:54:y:1987:i:3:p:437-59 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1966. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()The email address of this maintainer does not seem to be valid anymore. Please ask to update the entry or send us the correct address
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.