Journal Article

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

Moshe Buchinsky, Denis Fougère, Francis Kramarz and Rusty Tchernis

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 77, issue 3, pages 972-1001
Published in print July 2010 | ISSN: 0034-6527
Published online July 2010 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2010.598.x
Interfirm Mobility, Wages and the Returns to Seniority and Experience in the United States

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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.

Journal Article.  13848 words.  Illustrated.

Subjects: Economics

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