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Job Mobility and Wage Dynamics

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  • Dean R Hyslop
  • David C Mare

Abstract

Matched employer-employee data research has found that workers f wages are affected by the characteristics of the firms they work in, and that higher skilled workers tend to be employed by higher paying firms. This paper examines the contribution of workers f job mobility to their wage dynamics. We focus on the possible trade-off between moving to a better paying firm and losing a firm-tenure specific component of earnings, and examine what types of workers benefit from changing firms, rather than staying with their existing employer. Our analysis provides four main findings. First, although the raw earnings gains to jobmovers and stayers are about the same, we find that, after controlling for observable differences, job-movers have about 1.3 percent lower annual earnings growth than nonmovers. Second, we estimate that job-movers gain 0.3 percent per year on average from moving to higher paying firms, but lose 1.6 percent in transitory earnings associated with changing jobs. The gains from moving to better firms are larger for both younger and new entrant workers, while the transitory earnings losses are smaller. We interpret these findings as being due to an earnings growth trade-off for workers between moving to a higher paying firm and losing their tenure-related earnings at their existing firm. Third, we estimate that, on average, workers gain (almost) all of the change in firm earnings premiums when they change jobs. However, such gains are not equally shared by all workers. In particular, our estimates suggest that it is the higher ability workers (as measured by the estimated worker earnings premiums) whose earnings gain (or lose) the most from moving to a firm with higher (or lower) earnings premiums. Finally, we find that workers f earnings also benefit on average from a change in the average earnings of their co-workers. Controlling for other factors, we estimate that a 1 standard deviation change in the estimated average peer earnings is associated with about 0.25 percent change in a worker fs earnings on average.

Suggested Citation

  • Dean R Hyslop & David C Mare, 2009. "Job Mobility and Wage Dynamics," Global COE Hi-Stat Discussion Paper Series gd09-107, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd09-107
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-107.pdf
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    References listed on IDEAS

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    1. Jolivet, Gregory & Postel-Vinay, Fabien & Robin, Jean-Marc, 2006. "The empirical content of the job search model: Labor mobility and wage distributions in Europe and the US," European Economic Review, Elsevier, vol. 50(4), pages 877-907, May.
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    Cited by:

    1. Richard Fabling & David C. Maré, 2016. "Firm-Level Hiring Difficulties: Persistence, Business Cycle And Local Labour Market Influences," Journal of Labor Research, Springer, vol. 37(2), pages 179-210, June.
    2. Isabelle Sin & Richard Fabling & Adam B. Jaffe & David C. Maré & Lynda Sanderson, 2014. "Exporting, Innovation and the Role of Immigrants," Working Papers 14_15, Motu Economic and Public Policy Research.

    More about this item

    Keywords

    Earnings; Linked Employer-Employee Data; worker mobility; job turnover;

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