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Interfirm Mobility, Wages and the Returns to Seniority and Experience in the U.S

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  • Moshe Buchinsky

    (Crest)

  • Denis Fougère

    (Crest)

  • Francis Kramarz

    (Crest)

  • Rusty Tchernis

    (Crest)

Abstract

In this paper, we follow on the seminal work of Altonji and Shakotko (1987) and Topel (1991) and reinvestigate the returns to seniority in the U.S. These papers specify a wage function, in which workers’ wages can change through two channels: (a) returns to their seniority; and (b) returns to their labor market experience. We start from the same wage equation as in previous studies, and, following our theoretical model, we explicitly include a participation-employment equation and an interfirm mobility equation. The employment and mobility decisions define the individual’s experience and seniority. Because experience and seniority are fully endogenized, we introduce into the wage equation a summary of the workers’ entire career and past jobs. The three-equation system is estimated simultaneously using the Panel Study of Income Dynamics (PSID). For all three education groups that we study, returns to seniority are quite high, even higher than what was previously obtained by Topel. On the other hand, the returns to experience appear to be similar to those previously found in the literature.
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  • Moshe Buchinsky & Denis Fougère & Francis Kramarz & Rusty Tchernis, 2002. "Interfirm Mobility, Wages and the Returns to Seniority and Experience in the U.S," Working Papers 2002-29, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2002-29
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    References listed on IDEAS

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    Cited by:

    1. I. Sebastian Buhai & Coen N. Teulings, 2014. "Tenure Profiles and Efficient Separation in a Stochastic Productivity Model," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 32(2), pages 245-258, April.
    2. Joseph G. Altonji & Anthony A. Smith Jr. & Ivan Vidangos, 2013. "Modeling Earnings Dynamics," Econometrica, Econometric Society, vol. 81(4), pages 1395-1454, July.
    3. Moshe Buchinsky & Denis Fougère & Francis Kramarz & Rusty Tchernis, 2002. "Interfirm Mobility, Wages and the Returns to Seniority and Experience in the U.S," Working Papers 2002-29, Center for Research in Economics and Statistics.
    4. Guiso, Luigi & Pistaferri, Luigi & Schivardi, Fabiano, 2006. "Labour Adjustment: Disentangling Firing and Mobility Costs," CEPR Discussion Papers 5787, C.E.P.R. Discussion Papers.
    5. Beffy, Magali & Buchinsky, Mosche & Fougère, Denis & Kamionka, Thierry & Kramarz, Francis, 2006. "The Returns to Seniority in France (and Why are They Lower than in the United States?)," CEPR Discussion Papers 5486, C.E.P.R. Discussion Papers.
    6. Givord, Pauline & Maurin, Eric, 2003. "Job Tenure, Wages and Technology: A Reassessment Using Matched Worker-Firm Panel Data," CEPR Discussion Papers 4147, C.E.P.R. Discussion Papers.
    7. van den Berg, Gerard J. & van Vuuren, Aico, 2010. "The effect of search frictions on wages," Labour Economics, Elsevier, vol. 17(6), pages 875-885, December.
    8. Katie Meara & Francesco Pastore & Allan Webster, 2020. "The gender pay gap in the USA: a matching study," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(1), pages 271-305, January.
    9. Frederiksen, Anders & Halliday, Timothy J. & Koch, Alexander K., 2010. "What Do We Work For? An Anatomy of Pre- and Post-Tax Earnings Growth," IZA Discussion Papers 5298, Institute of Labor Economics (IZA).
    10. Anders Frederiksen & Timothy Halliday & Alexander K. Koch, 2016. "Within- and Cross-Firm Mobility and Earnings Growth," ILR Review, Cornell University, ILR School, vol. 69(2), pages 320-353, March.
    11. Tang, Heiwai, 2012. "Labor market institutions, firm-specific skills, and trade patterns," Journal of International Economics, Elsevier, vol. 87(2), pages 337-351.
    12. Daniel Fernández-Kranz & Marie Paul & Núria Rodríguez-Planas, 2015. "Part-Time Work, Fixed-Term Contracts, and the Returns to Experience," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(4), pages 512-541, August.
    13. Elena Pastorino, 2013. "Job matching within and across firms," Staff Report 482, Federal Reserve Bank of Minneapolis.
    14. Amalia Cristescu & Maria Denisa Vasilescu & Larisa Stanila & Madalina Ecaterina Popescu, 2013. "Regional Analysis Of The Real Earnings In Romania," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 7(2), pages 58-78, DECEMBER.
    15. Devereux, Paul J & Hart, Robert A & Roberts, J Elizabeth, 2013. "Job spells, employer spells, and wage returns to tenure," Stirling Economics Discussion Papers 2013-01, University of Stirling, Division of Economics.
    16. Raven Molloy & Christopher L. Smith & Abigail Wozniak, 2013. "Declining Migration wihin the US: The Role of the Labor Market," Working Papers 13-53, Center for Economic Studies, U.S. Census Bureau.
    17. Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    18. Néstor Gandelman, 2008. "Mobility Among Employers and Assortative Matching," Journal of Sports Economics, , vol. 9(4), pages 351-370, August.
    19. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    20. Guillaume Horny & Rute Mendes & Gerard J. Van den Berg, 2006. "Job mobility in Portugal: a Bayesian study with matched worker-firm data," Working Papers of BETA 2006-32, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    21. Oana Calavrezo & Richard Duhautois & Francis Kramarz, 2011. "L'importance des "réseaux d'entreprises" dans la mobilité sectorielle des salariés," Working Papers hal-00831499, HAL.

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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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