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Specific capital, mobility, and wages: Wages rise with job seniority (1990)
| Citations: | 401 - 1 self |
BibTeX
@MISC{Topel90specificcapital,,
author = {Robert Topel},
title = {Specific capital, mobility, and wages: Wages rise with job seniority},
year = {1990}
}
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Abstract
The idea that wages rise relative to alternatives as job seniority accumulates is the foundation of the theory of specific human capital, as well as other widely accepted theories of compensation. The fact that persons with longer job tenures typically earn higher wages tends to support these views, yet this çvidence ignores the decisions that have brought individuals to the combination of wages, job tenure, and experience that areobserved in survey data. Allowing for sources of bias generated by these decisions, this paper uses longitudinal data to estimate a lower bound on the avenge return to job seniority among adult men. I find that 10 years of current job seniority raises the wage of the typical male worker in the U.S. by over 25 percent. This is an estimate of what the typical worker would lose if his job were to end exogenously. Overall, the evidence implies that accumulation of specific capital is an important ingredient of the typical employment relationship, and of life-cycle earnings and productivity as well. Continuation of these relationships has substantial specific value for workers.
Keyphrases
job seniority specific capital job tenure adult men survey data evidence implies accepted theory longitudinal data life-cycle earnings typical male worker specific human capital important ingredient substantial specific value current job seniority typical employment relationship typical worker avenge return
