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Returns to Tenure and Experience Revisited -- Do Less Educated Workers Gain Less from Work Experience?

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  • Helen Connolly
  • Peter T. Gottschalk

Abstract

This paper explores whether within job and between job wage growth is lower for less-educated workers. While a simple model of heterogeneous learning ability predicts that individuals with low learning ability will have flatter wage profiles, this prediction has been largely ignored in the recent welfare reform debates. The key econometric problem in estimating returns to tenure and experience is that wages depend on the unobservable job match component, which is endogenous. We depart from the standard method for dealing with this problem in one important way. We show that this alternative implies that wages grow with the number of previous successful job matches. In our empirical work we show that this source of between job wage growth is large. Furthermore, we show that this source of wage growth, as well as the standard returns to tenure and experience, are substantially smaller for the least educated.

Suggested Citation

  • Helen Connolly & Peter T. Gottschalk, 2001. "Returns to Tenure and Experience Revisited -- Do Less Educated Workers Gain Less from Work Experience?," JCPR Working Papers 224, Northwestern University/University of Chicago Joint Center for Poverty Research.
    • Handle: RePEc:wop:jopovw:224
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    Cited by:

    1. Mary C. Noonan & Colleen M. Heflin, 2005. "Does Welfare Participation Affect Women's Wages?," Social Science Quarterly, Southwestern Social Science Association, vol. 86(s1), pages 1123-1145, December.
    2. Alejos, Luis Alejandro, 2003. "Contribution of the determinants of income inequality in Guatemala," MPRA Paper 42757, University Library of Munich, Germany.
    3. Matthew Hall & George Farkas, 2008. "Does human capital raise earnings for immigrants in the low-skill labor market?," Demography, Springer;Population Association of America (PAA), vol. 45(3), pages 619-639, August.
    4. Josse Delfgaauw, 2007. "Where to go? Workers' reasons to quit and intra- vs. interindustry job mobility," Applied Economics, Taylor & Francis Journals, vol. 39(16), pages 2057-2067.
    5. Peter Gottschalk, 2000. "Wage Mobility within and between Jobs," Boston College Working Papers in Economics 486, Boston College Department of Economics, revised 03 Apr 2001.
    6. Tricia Gladden & Christopher Taber, 2009. "The relationship between wage growth and wage levels," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 914-932.
    7. Peter Gottschalk, 2001. "Wage Mobility within and between Jobs," LoWER Working Papers wp1, AIAS, Amsterdam Institute for Advanced Labour Studies.
    8. Eric French & Bhashkar Mazumder & Christopher Taber, 2005. "The changing pattern of wage growth for low skilled workers," Working Paper Series WP-05-24, Federal Reserve Bank of Chicago.
    9. Josse Delfgaauw, 2005. "Where to go? Workers' Reasons to quit and Intra- versus Interindustry Job Mobility," Tinbergen Institute Discussion Papers 05-027/1, Tinbergen Institute, revised 08 Aug 2005.

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