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Do Earnings Increase with Job Seniority?

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  • Ruhm, Christopher J

Abstract

Cross-sectional wage regressions overstate the extent to which earnings increase with job seniority because they fail to take account of the sorting which occurs when high wage workers have lower rates of mobility. The main source of bias is a negative correlation between turnover probabilities and (unobserved) market valued individual characteristics which are transferable across firms. These results argue for the importance of theories which emphasize generally applicable individual differences and against those which focus on firm-specific attributes. Copyright 1990 by MIT Press.

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  • Ruhm, Christopher J, 1990. "Do Earnings Increase with Job Seniority?," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 143-147, February.
    • Handle: RePEc:tpr:restat:v:72:y:1990:i:1:p:143-47
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    Citations

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    Cited by:

    1. Klaus F. Zimmermann, 1998. "German Job Mobility and Wages," Palgrave Macmillan Books, in: Isao Ohashi & Toshiaki Tachibanaki (ed.), Internal Labour Markets, Incentives and Employment, chapter 12, pages 300-332, Palgrave Macmillan.
    2. Ayaka Nakamura, 2019. "The Effect of Employer Tenure on Wages in Japan," OSIPP Discussion Paper 19E007, Osaka School of International Public Policy, Osaka University.
    3. Kuhn, Peter & Sweetman, Arthur, 1999. "Vulnerable Seniors: Unions, Tenure, and Wages Following Permanent Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 671-693, October.
    4. Jaap H. Abbring & Gerard J. van den Berg & Pieter A. Gautier & A. Gijsbert C. van Lomwel & Jan C. van Ours & Christopher J. Ruhm, 1998. "Displaced Workers in the United States and the Netherlands," Tinbergen Institute Discussion Papers 98-084/3, Tinbergen Institute.
    5. Ying L. Compton & Angela K. Gore & Susan L. Kulp, 2017. "Compensation design and political risk: the case of city managers," Review of Accounting Studies, Springer, vol. 22(1), pages 109-140, March.
    6. Schwalbach, Joachim & Brenner, Steffen, 2001. "Managerqualität und Unternehmensgröße," SFB 373 Discussion Papers 2001,18, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    7. Elisabetta Magnani, 2001. "Risk of Labor Displacement and Cross-Industry Labor Mobility," ILR Review, Cornell University, ILR School, vol. 54(3), pages 593-610, April.
    8. Arnaud Lefranc, 2002. "Labor Market Dynamics and Wage Losses of Displaced Workers in France and the United-States," THEMA Working Papers 2002-15, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    9. Kenneth A. Couch, 2001. "Individual Heterogeneity, Job Matching, and Returns to Tenure in Germany," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 39-43.
    10. Kenneth A. Counch, 2003. "Job Matching and Wage Growth in the U.S. and Germany," Working papers 2003-10, University of Connecticut, Department of Economics.
    11. Burda, Michael C. & Mertens, Antje, 2001. "Estimating wage losses of displaced workers in Germany," Labour Economics, Elsevier, vol. 8(1), pages 15-41, January.

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