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A Dynamic Analysis of Sectoral Mobility, Worker Mismatch, and the Wage-Tenure Profile

Author

Listed:
  • David Fuller

    (Concordia University)

  • Damba Lkhagvasuren

    (Concordia University)

  • Antoine Terracol

    (Université Paris 1)

  • Stephane Auray

    (CREST-Ensai)

Abstract

A dynamic multi-sector model with both net and excess mobility is developed to quantify the determinants of the canonical increasing wage-tenure profile. The model distinguishes between three potential factors: sector-specific skill accumulation, sector-specific shocks, and dynamic worker-sector mismatch shocks. The sector-specific skill premium drives the observed negative correlation between life-time earnings and mobility. Excess mobility driven by worker-sector mismatch shocks explains nearly 20 percent of the observed wage growth for recent movers. Ignoring dynamic worker-sector mismatch leads to biased estimates of the sector-specific skill premium. Sectoral shocks have a negligible impact on wages and mobility.

Suggested Citation

  • David Fuller & Damba Lkhagvasuren & Antoine Terracol & Stephane Auray, 2014. "A Dynamic Analysis of Sectoral Mobility, Worker Mismatch, and the Wage-Tenure Profile," 2014 Meeting Papers 876, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:876
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    Cited by:

    1. Fuller, David L. & Kudlyak, Marianna & Lkhagvasuren, Damba, 2014. "Productivity insurance: The role of unemployment benefits in a multi-sector model," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 39-53.
    2. Carlos Carrillo‐Tudela & Ludo Visschers, 2023. "Unemployment and Endogenous Reallocation Over the Business Cycle," Econometrica, Econometric Society, vol. 91(3), pages 1119-1153, May.
    3. Simona E. Cociuba & James C. MacGee, 2018. "Demographics and Sectoral Reallocations: A Search Theory with Immobile Workers," University of Western Ontario, Departmental Research Report Series 20182, University of Western Ontario, Department of Economics.
    4. Carrillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2016. "The extent and cyclicality of career changes: Evidence for the U.K," European Economic Review, Elsevier, vol. 84(C), pages 18-41.
    5. David Pierce & Simon Shepherd & Daniel Johnson, 2019. "Modelling the Impacts of Inter-City Connectivity on City Specialisation," International Journal of System Dynamics Applications (IJSDA), IGI Global, vol. 8(4), pages 47-70, October.
    6. Carrillo-Tudela, Carlos & Visschers, Ludo, 2014. "Unemployment and Endogenous Reallocation over the Business Cycle," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-35, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Carrillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2015. "The Extent and Cyclicality of Career Changes: Evidence for the UK," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-52, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Carlos Carrillo-Tudela & Bart Hobijn & Powen She & Ludo Visschers, 2014. "The Extent and Cyclicality of Career Changes: Evidence for the UK (first version)," Edinburgh School of Economics Discussion Paper Series 246, Edinburgh School of Economics, University of Edinburgh.
    9. Carillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2014. "The Extent and Cyclicality of Career Changes: Evidence for the UK," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-40, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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