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Returns to Type or Tenure?

Listed author(s):
  • Amann, R.
  • Klein, T.J.

    (Tilburg University, Center For Economic Research)

A regression of wages on firm tenure is likely to yield biased estimates of the returns to tenure because tenure and wages are confounded by unobserved attributes of the job and the unobserved quality of the match between the firm and the employee. Previously, the within-job variation in tenure has been used as an instrument to estimate the average returns to tenure. In this paper, we propose to use instead an easy-to-implement control function estimator for the returns to tenure and their dependence on unobserved heterogeneity. The obtained results for Germany indicate that there is a substantial amount of unobserved heterogeneity in the returns to tenure and that good job matches are characterized by higher returns to tenure in the first five years and lower returns thereafter.

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File URL: https://pure.uvt.nl/portal/files/1299189/2011-001.pdf
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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-001.

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Date of creation: 2011
Handle: RePEc:tiu:tiucen:2bbdd8bc-f35b-49fa-a430-c8c3bf5574cc
Contact details of provider: Web page: http://center.uvt.nl

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