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Tenure, Experience, Human Capital and Wages: A Tractable Equilibrium Search Model of Wage Dynamics

  • Jesper Bagger
  • François Fontaine

    (Bureau d'économie théorique et appliquée (BETA))

  • Fabien Postel-Vinay

    (Department of Economics)

  • Jean-Marc Robin

    (Département d'économie)

We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks. Monthly wage growth is decomposed into the contributions of human capital and job search, within and between jobs. Human capital accumulation is found to be the most important source of wage growth in early phases of workers’ careers, but is soon surpassed by search-induced wage growth. Conventional measures of the returns to tenure hide substantial heterogeneity between different workers in the same firm and between similar workers in different firms.

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Date of creation: Aug 2011
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Handle: RePEc:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09j0045h4bh
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  1. Jean‐Marc Robin, 2011. "On the Dynamics of Unemployment and Wage Distributions," Econometrica, Econometric Society, vol. 79(5), pages 1327-1355, 09.
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  7. Jesper Bagger & Francois Fontaine & Jean-Marc Robin, 2014. "Tenure, experience, human capital and wages: a tractable equilibrium search model of wage dynamics," CeMMAP working papers CWP12/14, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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