Wage growth and occupational mobility in Spain: movers vs stayers

Purpose - The purpose of this paper is to analyze the causality between job mobility status, occupational career and wage growth. First, it will be verified whether the type of job-to-job mobility has some influence on the occupational mobility and, second, whether the type of occupational change has some effect on wage growth for both movers and stayers. Design/methodology/approach - The influence of job-to-job mobility on occupational mobility is explained through a random effect panel multinomial logit model to account for the unobserved individual heterogeneity. Next, the effect of occupational mobility on wage growth for both movers and stayers is obtained after applying Heckman’s two-step procedure that corrects the endogeneity of occupational mobility in a panel data framework. Findings - The main results confirm, first, that inter-firm mobility is a mechanism used by the worker to achieve upward mobility. Second, the accumulation of human capital has a positive influence on promotions for movers and stayers, getting the highest probability of upward occupational mobility for workers with higher education. Moreover, promotion is a suitable mechanism for improving worker’s wages. In particular, the wage gain is between 5 percent for stayers and 9 percent for quitters compared to workers who do not change their occupation. Social implications - The main findings of this research would justify the implementation of active labor market policies that increase market transparency and decrease information asymmetries between workers and employers. In this way, the adjustment process between job offer and demand would improve and workers would have more possibilities of ascending on the occupational ladder and getting better-paid jobs. Originality/value - To the best of the author’s knowledge, this paper is the first study in the economic literature discussing Spain that examines the links between change of firm, occupational mobility and wage dynamics.