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Empirical Evidence on Occupation and Industry Specific Human Capital

  • Sullivan, Paul

This paper presents instrumental variables estimates of the effects of firm tenure, occupation specific work experience, industry specific work experience, and general work experience on wages using data from the 1979 Cohort of the National Longitudinal Survey of Youth. A key feature of the empirical work presented in this paper is that the returns to human capital are allowed to vary across occupations, in contrast to existing research which has constrained the parameters of the wage equation to be the same across occupations. The estimates indicate that both occupation and industry specific human capital are key determinants of wages, and the importance of various types of human capital varies widely across one-digit occupations. Human capital is primarily occupation specific in occupations such as craftsmen, where workers realize a 14% increase in wages after five years of occupation specific experience but do not realize wage gains from industry specific experience. In contrast, human capital is primarily industry specific in other occupations such as managerial employment where workers realize a 23% wage increase after five years of industry specific work experience. In other occupations, such as professional employment, both occupation and industry specific human capital are key determinants of wages.

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File URL: https://mpra.ub.uni-muenchen.de/863/1/MPRA_paper_863.pdf
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File URL: https://mpra.ub.uni-muenchen.de/9312/1/MPRA_paper_9312.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 863.

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Date of creation: Oct 2006
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Handle: RePEc:pra:mprapa:863
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  9. Christian Dustmann & Costas Meghir, 1999. "Wages, experience and seniority," IFS Working Papers W99/01, Institute for Fiscal Studies.
  10. Abraham, Katharine G & Farber, Henry S, 1987. "Job Duration, Seniority, and Earnings," American Economic Review, American Economic Association, vol. 77(3), pages 278-97, June.
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  18. Gueorgui Kambourov & Iourii Manovskii, 2009. "Occupational Specificity Of Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 63-115, 02.
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  24. Sicherman, Nachum & Galor, Oded, 1990. "A Theory of Career Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 169-92, February.
  25. Paul Sullivan, 2009. "Estimation of an Occupational Choice Model when Occupations are Misclassified," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
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