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Do initial conditions persist between firms? : an analysis of firm-entry cohort effects and job losers using matched employer-employee data

  • Wachter, Till von
  • Bender, Stefan


    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

Registered author(s):

    "Influential studies have suggested that initial conditions can have persistent effects on workers' careers within firms. It is a longstanding question among economists whether such lasting wage differentials among firms and industries are due to persistent deviations of wages from workers' skills due to contracting and market frictions, or whether they arise from permanent differences among workers' skills. However, there is currently little representative evidence on firm-entry cohort effects and few explicit tests of alternative explanations. We use information on the universe of workers from a large German manufacturing sector from matched employer- employee records to show that firm-entry cohort effects are a pervasive phenomenon for the firms we study. The cohort effects we estimate are highly heterogeneous across firms and slowly fade over time. We also find that wage premiums on the past job are lost at job displacement, and that initial positive effects on wage levels at the new job fades over time. This suggests that at least part of firm-entry cohort effects arise from transitory rents, and that initial effects from previous wages fade as workers' search for better jobs." (Author's abstract, IAB-Doku) ((en))

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    Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200719.

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    Length: 43 pages
    Date of creation: 20 Jun 2007
    Date of revision:
    Publication status: published in: Bender, p., J. Lane, K. Shaw, F. Andersson & T. v. Wachter (Ed.): The analysis of firms and employees : quantitative and qualitative approaches. National Bureau of Economic Research. Conference report, Chicago 2008, p. 135-162
    Handle: RePEc:iab:iabdpa:200719
    Contact details of provider: Postal: Regensburger Str. 104, D-90327 Nürnberg
    Phone: 0911/179-0
    Fax: 0911/179-3258
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