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Tenure, experience, human capital and wages: a tractable equilibrium search model of wage dynamics

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  • Jesper Bagger
  • Francois Fontaine
  • 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. Career wage growth is decomposed into the contributions of human capital and job search, within and between jobs. Human capital accumulation is largest for highly educated workers, and both human capital accumulation and job search contribute to the observed concavity of wage-experience profiles. The contribution from job search to wage growth, both within- and between-job, declines over the first ten years of a career- the `job-shopping' phase of a working life - after which workers settle into high-quality jobs and use outside off ers to generate gradual wage increases, thus reaping the benefits from competition between employers.

Suggested Citation

  • Jesper Bagger & Francois Fontaine & Jean-Marc Robin, 2014. "Tenure, experience, human capital and wages: a tractable equilibrium search model of wage dynamics," CeMMAP working papers 12/14, Institute for Fiscal Studies.
    • Handle: RePEc:azt:cemmap:12/14
    DOI: 10.1920/wp.cem.2014.1214
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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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