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Are Individuals Optimizing Their Wage Path? An Analysis Using Linked Employer-Employee Data


  • Schneck, Stefan


This paper examines employer-to-employer mobility by describing the individual wage trajectories along the working career. The model, which is designed to introduce optimal between-firm mobility, is based on the search, the matching, and the human capital theory. It is emphasized that hopping from one wage trajectory to another by mobility may be accompanied with wage losses. An empirical review of the model extracts information on whether the between-firm mobility wage trajectory exceeds the within-firm wage path. The results are in line with the optimal employer-to-employer mobility model derived in this paper. Furthermore, it is shown that downward mobility as well as upward mobility is very common in reality, and that both types of mobility are shown to cause wage losses.

Suggested Citation

  • Schneck, Stefan, 2008. "Are Individuals Optimizing Their Wage Path? An Analysis Using Linked Employer-Employee Data," Hannover Economic Papers (HEP) dp-403, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  • Handle: RePEc:han:dpaper:dp-403

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    References listed on IDEAS

    1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
    2. Dalgaard, Carl-Johan & Strulik, Holger, 2007. "A Bioeconomic Foundation of the Malthusian Equilibrium: Body Size and Population Size in the Long-Run," Hannover Economic Papers (HEP) dp-373, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
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    6. Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
    7. Masao Ogaki & Jonathan D. Ostry & Carmen M. Reinhart, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 38-71, March.
    8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
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    10. Mino, Kazuo, 2006. "Voracity vs. scale effect in a growing economy without secure property rights," Economics Letters, Elsevier, vol. 93(2), pages 278-284, November.
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    More about this item


    Employer-to-employer mobility; wage trajectories; wage loss;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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