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Job Changes and Individual-Job Specific Wage Dynamics

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  • Hospido, Laura

    () (Bank of Spain)

Abstract

This paper develops an error components model that is used to examine the impact of job changes on the dynamics and variance of individual log earnings. I use data on work histories drawn from the Panel Study of Income Dynamics (PSID) that makes it possible to distinguish between voluntary and involuntary job-to-job changes. The potential endogeneity of job mobility in relation to earnings is circumvented by means of an instrument variable estimation method that also allows to control for unobserved individual-job specific heterogeneity. Once controlled for individual and job-specific effects, the persistence within jobs is almost zero, whereas across jobs is significant but small.

Suggested Citation

  • Hospido, Laura, 2010. "Job Changes and Individual-Job Specific Wage Dynamics," IZA Discussion Papers 5088, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5088
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    individual wages; job changes; individual-job specific fixed effects; dynamic models; panel data;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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