American Economic Review: Vol. 104 No. 6 (June 2014)

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Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics

Article Citation

Bagger, Jesper, François Fontaine, Fabien Postel-Vinay, and Jean-Marc Robin. 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics." American Economic Review, 104(6): 1551-96.

DOI: 10.1257/aer.104.6.1551

Abstract

We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks. Wage growth is decomposed into contributions of human capital and job search, within and between jobs. Human capital accumulation is largest for highly educated workers. The contribution from job search to wage growth, both within- and between-job, declines over the fi rst ten years of a career – the ‘job-shopping’ phase of a working life – after which workers settle into high-quality jobs using outside o ffers to generate gradual wage increases, thus reaping the bene fits from competition between employers.

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Authors

Bagger, Jesper (Royal Holloway, U London)
Fontaine, François (U Lorraine and CREST-ENSAE, Paris)
Postel-Vinay, Fabien (U College London and Sciences Po, Paris)
Robin, Jean-Marc (Sciences Po, Paris and U College London)

JEL Classifications

J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials
J63: Labor Turnover; Vacancies; Layoffs
J64: Unemployment: Models, Duration, Incidence, and Job Search


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