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Industry-Specific Capital and the Wage Profile: Evidence from the NLSY and the PSID

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  • Daniel Parent

Abstract

Using data from the NLSY (1979-1991) and from the Panel Study of Income Dynamics (PSID, 1981-1987), we seek to determine whether there is any net positive return to tenure with the current employer once we control for industry-specific capital. Using data from the PSID, Topel (JPE 1991) concluded that 10 years of seniority with an employer translated into a net return of about 25%. However, once we include total experience in the industry as an additional explanatory variable, the return to seniority vanishes almost completely when we use either OLS, GLS or IV-GLS estimation methods, although this conclusion varies somewhat according to the occupation, some occupation classes showing a negative net return to tenure and others showing a positive net return. Note also that this result holds whether the analysis is carried out at the 1-digit, 2-digit or 3-digit level. Therefore, it seems that what matters most for the wage profile in terms of human capital is not so much firm-specificity but industry-specificity. Avec les données du NLSY ainsi que celles du Panel Study of Income Dynamics (PSID), on cherche à déterminer s'il y a un rendement positif net lié à l'ancienneté dans la firme. Topel (JPE 1991) a montré avec un échantillon du PSID l'existence d'un rendement substantiel (25 % en 10 ans). Toutefois, du moment que l'on inclut l'expérience dans l'industrie courante dans l'équation de salaire (en plus de l'ancienneté dans la firme ainsi que l'expérience totale de travail), l'effet d'ancienneté disparaît presque complètement, que l'on estime par simples moindres carrés généralisés ou par la méthode des variables instrumentales (IV-GLS), et ce, avec les deux échantillons différents. ¸ noter également que ce résultat est robuste au degré d'agrégation des classes d'industries.

Suggested Citation

  • Daniel Parent, 1995. "Industry-Specific Capital and the Wage Profile: Evidence from the NLSY and the PSID," CIRANO Working Papers 95s-26, CIRANO.
    • Handle: RePEc:cir:cirwor:95s-26
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    File URL: https://cirano.qc.ca/files/publications/95s-26.pdf
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    References listed on IDEAS

    as
    1. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
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    More about this item

    Keywords

    Tenure ; Return; Ancienneté ; Rendement;
    All these keywords.

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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