On the Negative Correlation Between Performance and Experience and Education
We consider a model where a worker's productivity must exceed some lower bound for himto satisfy the minimum qualifications for a particular job. If the worker's productivity exceeds some upper bound he is promoted. We assume the productivity of every worker increases with experience, tenure and education. This relationship differs across workers. We present distributions of workers with the property that, among workers on a particular job, education, experience, or tenure is negatively correlated with productivity; even though for any single worker on that job those demographic characteristics have strongly positive effects on productivity. The result is due to the effect of the job assignment rule on the distribution of workers on the job.
|Date of creation:||Apr 1985|
|Date of revision:|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Milton Harris & Bengt Holmstrom, 1982. "A Theory of Wage Dynamics," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 315-333.
- James L. Medoff & Katharine G. Abraham, 1980.
"Experience, Performance, and Earnings,"
NBER Working Papers
0278, National Bureau of Economic Research, Inc.
- Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
- James L. Medoff & Katharine G. Abraham, 1981. "Are Those Paid More Really More Productive? The Case of Experience," Journal of Human Resources, University of Wisconsin Press, vol. 16(2), pages 186-216.
- J. Luis Guasch & Andrew Weiss, 1982. "An Equilibrium Analysis of Wage—Productivity Gaps," Review of Economic Studies, Oxford University Press, vol. 49(4), pages 485-497.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
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