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Review of Economic Studies Vol. 77 No. 3 2010

Interfirm Mobility, Wages and the Returns to Seniority and Experience in the United States

Moshe Buchinsky1,2; Denis Fougère3,1,4,5; Francis Kramarz3,1,4,5; Rusty Tchernis6

1 Institut National de la Statistique et des Etudes Economiques · 2 University of California, Los Angeles · 3 Center for Economic and Policy Research · 4 Centre for Research in Engineering Surface Technology · 5 Centre de Recherche en Économie et Statistique · 6 Georgia State University

Abstract

In this paper, we expand on the seminal work of Altonji and Shakotko (1987) and Topel (1991) and reinvestigate the returns to seniority in the United States. We begin with the same wage equation as in previous studies. We extend the model of Hyslop (1999) and explicitly model the participation/employment and inter-firm mobility decisions, which, in turn, define the individual's experience and seniority. We introduce into the wage equation a summary of the workers' entire career path. The three-equation system is estimated simultaneously using data from the Panel Study of Income Dynamics (PSID). We find that for each of the three education groups studied the returns to seniority are larger than those previously found in the literature.

DOI
10.1111/j.1467-937x.2010.598.x
Volume
77
Issue
3
Pages
972-1001
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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