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Returns to Type or Tenure?

  • Robert Amann

    ()

    (Department of Economics, University of Konstanz)

  • Tobias Klein

    ()

    (Department of Economics, University of Mannheim)

This paper takes a closer look at the way unobserved characteristics of individuals confound wages and firm tenure. In turn of our structural analysis, which is built on estimating a reduced form for tenure and a structural wage equation, we disentangle returns to a latent type variable from estimates of general returns to tenure. The obtained results for Germany indicate that the type plays a crucial role in the remuneration of employees. As compared to types who stay, quitters earn less on average, but obtain steeper wage profiles in tenure. This nonseparability has previously remained unnoticed in the literature.

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Paper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 06-13.

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Length: 28 pages
Date of creation: 03 Aug 2006
Date of revision:
Handle: RePEc:knz:hetero:0613
Contact details of provider: Postal: D-78457 Konstanz
Phone: +49 7531 88 2314
Fax: +49-7531-88-2145
Web page: http://www.uni-konstanz.de/forschergruppewiwi

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