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

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Listed:
  • Jesper Bagger
  • Fran?ois Fontaine
  • Fabien Postel-Vinay
  • Jean-Marc Robin

Abstract

We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks. Wage growth is decomposed into contributions of human capital and job search, within and between jobs. Human capital accumulation is largest for highly educated workers. The contribution from job search to wage growth, both within- and between-job, declines over the fi rst ten years of a career – the ‘job-shopping’ phase of a working life – after which workers settle into high-quality jobs using outside o ffers to generate gradual wage increases, thus reaping the bene fits from competition between employers.

Suggested Citation

  • Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    • Handle: RePEc:aea:aecrev:v:104:y:2014:i:6:p:1551-96
    Note: DOI: 10.1257/aer.104.6.1551
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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