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Wage Mobility Through Job Mobility

  • Marcela Perticara

The purpose of this paper is to study the relationship between job mobility and wage mobility. One of the main points of this paper is that job mobility is not necessarily bad. Job mobility might be the quickest way in which workers can advance in their careers and move up in the wage structure. Specifically I am going to distinguish between voluntary and involuntary job changes in both the modeling of job mobility behavior and the determination of the wage gains associated with job changing activities. Using the National Longitudinal Survey of Youth data, I find that workers voluntarily leave their jobs whenever they find themselves being paid below the customary wage rate. In particular, a worker that earns 30% less than the average wage for a worker with his characteristics and labor market experience is more than one and a half times as likely to initiate a separation than a worker just earning the average wage rate. Conversely, a worker earning 30% more than the average wage for a worker with his qualifications and labor market experience faces almost a 50% higher risk of being laid-off. I also show that the informational content on this wage difference seems to decline as the worker acquires more experience (and presumably he learns more about his true productivity) or as the employer information sources increase. All these results are consistent across models. Workers’ post-separation wage gains also depend on this distinction. Voluntary job changes lead, on average, to gains on the order of 7%, while layoffs imply losses of 5%. That is, voluntary separations, on average, allow workers to improve their relative position in the wage structure. Laid-off workers, however, tend to perform poorly after experiencing a separation. Fifty-percent of the laid-off workers experience wage losses, while 70% of the voluntary job changes end in wage gains. Although quitters have positive wage gains on average, a fairly high amount of quits end up with wage losses. Quitting seems to be a risky, but very rewarding activity. Moreover, while at early stages of the career, workers experience large wage gains from quitting, these gains seem to disappear as their careers extends. Laid-off losses increase as the career extends, particularly for high-skilled workers

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Paper provided by Econometric Society in its series Econometric Society 2004 Latin American Meetings with number 204.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:latm04:204
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  1. Audrey Light & Kathleen McGarry, 1998. "Job Change Patterns And The Wages Of Young Men," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 276-286, May.
  2. Light, Audrey & Ureta, Manuelita, 1995. "Early-Career Work Experience and Gender Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 121-54, January.
  3. J. A. Hausman & W. E. Taylor, 1980. "Panel Data and Unobservable Individual Effects," Working papers 255, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Neal, Derek, 1999. "The Complexity of Job Mobility among Young Men," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 237-61, April.
  5. Bernhardt, Annette, et al, 1999. "Trends in Job Instability and Wages for Young Adult Men," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S65-90, October.
  6. Jacob Mincer, 1986. "Wage Changes in Job Changes," NBER Working Papers 1907, National Bureau of Economic Research, Inc.
  7. Ann P. Bartel & George J. Borjas, 1981. "Wage Growth and Job Turnover: An Empirical Analysis," NBER Chapters, in: Studies in Labor Markets, pages 65-90 National Bureau of Economic Research, Inc.
  8. McLaughlin, Kenneth J, 1990. "General Productivity Growth in a Theory of Quits and Layoffs," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 75-98, January.
  9. Loprest, Pamela J, 1992. "Gender Differences in Wage Growth and Job Mobility," American Economic Review, American Economic Association, vol. 82(2), pages 526-32, May.
  10. Keith, Kristen & McWilliams, Abagail, 1997. "Job Mobility and Gender-Based Wage Growth Differentials," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 320-33, April.
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