rent seeking and the transformation of employment relationships the effect of corporate restructuring on wage patterns determinants and inequality a key debate in research on corporate restructuring is whether this widespread and extensive transformation process made contemporary employment relationships more open with firms relying largely o

euler equations and money market interest rates a challenge for monetary policy models standard macroeconomic models equate the money market rate targeted by the central bank with the interest rate implied by a consumption euler equation we use u s data to calculate the interest rates implied by euler equations derived from a number of specifications of household preferences correlations between these euler equation rates and the federal funds rate are generally negative regression results and impulse response functions imply that the spreads between the euler equation rates and the federal funds rate are systematically linked to the stance of monetary policy our findings pose a fundamental challenge for models that equate the two

intergenerational economic mobility in the united states 1940 to 2000 we estimate trends in intergenerational economic mobility by matching men in the census to synthetic parents in the prior generation we find that mobility increased from 1950 to 1980 but has declined sharply since 1980 while our estimator places greater weight on location effects than the standard intergenerational coefficient the size of the bias appears to be small our preferred results suggest that earnings are regressing to the mean more slowly now than at any time since world war ii causing economic differences between families to become more persistent however current rates of positional mobility appear historically normal

are those paid more really more productive the case of experience this study uses computerized personnel microdata on the white male managerial and professional employees at a major u s corporation to address the following question can the additional earnings which are associated with more labor market experience at a point in time really be explained by higher productivity at the same point in time our answer to this question based on both cross sectional and longitudinal information is that performance plays a substantially smaller role in explaining cross sectional experience earnings differentials and earnings growth than is claimed by those who have adopted the human capital explanation of the experience earnings profile this response depends critically on our assumption that the performance ratings which supervisors give to their white male managerial and professional subordinates adequately reflect the subordinates relative productivity in the year of assessment we present a great deal of evidence which strongly supports this assumption

firm specific human capital job matching and turnover evidence from major league baseball 1900 1992 the two dominant labor market turnover hypotheses the firm specific human capital model fshcm and the job matching model suggest different patterns of player mobility in major league baseball the matching hypothesis predicts greater mobility of players in positions that require substantial team production a better match may offer large productivity gains alternately the fshcm predicts players in positions requiring the greatest amount of teamwork will benefit from specific knowledge making them less likely to change teams we examine the frequency distribution of trades by player position from 1900 1992 and find the fshcm provides the best explanation for turnover in this industry

job matching and on the job training conventional analysis predicts that workers pay part of their on the job training costs by accepting a lower starting wage and subsequently realize a return to this investment in the form of greater wage growth missing from the conventional treatment of on the job training is a discussion of the process by which heterogeneous workers are matched to jobs requiring varying amounts of training this matching process constitutes a key feature of the on the job training model presented in this article and tested with a unique data set containing extensive information concerning on the job training employer search wages and wage and productivity growth

learning by doing vs learning about match quality can we tell them apart understanding the accumulation of match specific capital is crucial in shedding light on the reasons for the prevalence of long term employ ment relationships and on the welfare consequences of turnover in the labor market one of the most important source of match specific capital is human capital acquired through match specific learning such learn ing can take on two distinct forms in the first case workers accumulate match specific human capital through learning by doing in the second case a worker and a firm in an employment relationship learn about the quality of the match over time thereby acquiring valuable information i construct a structural model that embeds these two learning explana tions i show that it is possible to distinguish the two explanations given turnover data on employing firms coupled with data on workers such data now exist in the form of matched employer employee data sets i use a matched french data set to estimate the structural model using the efficient method of moments a simulation based estimation method i find that while learning by doing could be present in the first few months of an employment relationship learning about match quality dominates at tenures above half a year this finding has important consequences for economists understanding of the sources of match specific capital and for the desirability of policies that alter the incentives for turnover for workers of different tenure

an equilibrium analysis of wage productivity gaps we develop a model in which each firm chooses a hiring standard as well as a wage schedule and an application fee we then characterize the set of nash equilibria and establish necessary and sufficient conditions for the existence of equilibrium if the distribution of productivities within each ability type is gaussian workers who pass the test will be paid more than the value of their marginal product while workers who fail the test will receive a wage net of the application fee below the value of their marginal product

wages nonwage job characteristics and labor mobility this paper examines the effects of a set of nonwage job characteristics on the quit decisions of young and middle aged men the data set was constructed by merging data in the national longitudinal surveys of young and mature men with data from the dictionary of occupational titles file and the bureau of economic analysis file on fringe benefits the empirical analysis shows that some nonwage job attributes have significant influence on worker quit behavior and that there are important differences in the effects of the nonwage job characteristics across age groups young men are significantly more likely than older men to quit repetitive jobs for example whereas the presence of bad working conditions is a more important factor in the quit decisions of the older cohort the results also indicate that for the older men fringe benefits have a stronger effect on quit decisions than wages do further evidence on age differences is provided through an analysis of panel data from the quality of employment survey since the time of adam smith the theory of equalizing differences that individuals are induced to accept less attractive jobs by receiving compensating increases in their wages has been used by economists to explain the existence of wage differences in the labor market by definition the theory has important implications for understanding the mobility of labor since an individual s decision to change jobs is based on all the characteristics of a job the wage rate fringe benefits and nonpecuniary job at

plant size tenure and discrimination in internal labor markets evidence on sex differentials abstract this paper examines the link between the operation of internal labor markets and sex differentials using 1983 may cps data we test whether male female differences in returns to tenure increase with plant size our results indicate that sex differentials in returns to tenure are only significant in plants employing more than 500 employees these results suggest that the discrimination that may exist within the framework of internal labor markets is most likely to be found in large plants

the costs of worker displacement this study identifies part of the social loss attendant upon displacement as the remaining value of the assets specific to the severed employment relationship a bargaining model is used to link wage tenure profiles to the amount of information firms and workers possess about the duration of that relationship if information is good the profile will flatten as displacement approaches using psid data for workers separated between 1977 and 1981 wage tenure profiles are found not to change this suggests that either workers or both firms and workers are surprised by the displacement the present value of that part of the social loss attributable to the worker s share of firm specific capital is around 7 000 1980 dollars

a theory of wage dynamics a dynamic equilibrium model of long term implicit labour contracts under incomplete but symmetric information is developed workers are assumed to be risk averse and of unknown ability or productivity risk neutral firms learn as do workers about each worker s productivity by observing the worker s output over time it is shown that equilibrium contracts provide for wages which never decline with age and increase only when the worker s market value increases above his current wage in addition to characterizing the equilibrium wage contract we also derive some of its implications for the behaviour of aggregate wages across various groups of workers these implications explain some findings in the recent empirical literature on ageearnings profiles in particular our model can explain why earnings may be positively related to experience even after controlling for productivity as some empirical studies have indicated

measuring match quality using subjective data we examine whether subjective information routinely collected in general surveys can be used to construct a single measure of underlying match quality which helps test matching models and predict labour market outcomes of workers

wages and job mobility of young workers this paper presents a discrete time version of jovanovic s model of worker firm matching descriptive evidence is presented that supports the notion that unobserved worker firm heterogeneity is an important component in the intertemporal structure of wages for young workers a structural econometric model of wage dynamics under worker firm sorting is developed and estimated finally a formal test of the matching model is carried out and the matching structure on intertemporal covariances of wages is not rejected my results indicate the necessity of jointly considering processes of turnover and wage growth when analyzing the labor market experiences of young workers

job mobility and earnings over the life cycle previous studies have shown that in the short run quits generally lead to wage increases on the next job and layoffs to no increase or to a wage cut the author of this study argues however that the prospect of a job change for any reason creates a disincentive for a worker to invest in training that is specific to the current job and therefore those who change jobs frequently may earn less over their life cycle than those who other things equal seldom change jobs an analysis of data from the national longitudinal survey of mature men supports that expectation showing that for white males job separations usually lead to wage gains in the short run but nonmobile workers tend to achieve significantly higher wages over the long run

do wages rise with job seniority many previous studies have found a strong positive effect of job seniority tenure on wages this paper re examines the evidence using a simple instrumental variables scheme to deal with the fact that tenure is likely to be related to unobserved individual and job characteristics that affect the wage we use the variation of tenure over a given job match as the principal instrumental variable for tenure the variation in tenure over the job is uncorrelated by construction with the fixed individual and job match specific components of the error term of the wage equation our main finding is that the partial effect of tenure on wages is small and that general labour market experience and job shopping account for most wage growth over a career the strong cross section relationship between tenure and wages is due primarily to heterogeneity bias prior researchers see mincer and jovanovic 1981 bartel and borjas 1981 borjas 1981 cline 1979 and mellow 1981 and many others have established that job seniority has a strong positive relationship with wage rates in a cross section or a cross section time series of individuals in this paper we re evaluate the evidence concerning the partial effects on wages of job seniority tenure and total labour market experience the extent to which wages rise with tenure is important for several reasons first and foremost the wage tenure profile is a fundamental question about the structure of earnings over careers second the wage tenure profile is a key determinant of the extent to which the earnings power of individuals is tied to specific jobs and it is important for assessment of the losses suffered by displaced workers hamermesh 1984 third evidence that wages rise with job tenure has been used to explain the decline in quits with tenure since the wage growth on the current job lowers the probability that the worker will locate a superior alternative a growing theoretical literature surveyed in parsons 1984 has taken the evidence of a strong wage tenure profile at face value and sought to provide an explanation for the relationship the most prominent explanation is the theory of specific human capital oi 1962 becker 1962 mincer 1974 parsons 1972 kuratani 1973 and hashimoto 1980 in which the growth of wages with tenure holding experience constant is attributed to the worker s share of investments in firm specific skills more recently lazear 1981 has presented a supervision model of wage growth in which firms defer compensation as a means of inducing workers not to shirk freeman 1977 and harris and holmstrom 1982 provide an explanation for wage growth based on an insurance motive salop and salop 1976 nickell 1976 and guasch and weiss 1982 present adverse selection models of wage growth in which firms use a wage tenure profile as a

asymmetric employer information promotions and the wage policy of firms abstract this paper provides evidence that inefficient promotion strategies and large wage increases upon promotion may both arise as a consequence of asymmetric employer information building on the seminal work by waldman 1984a and milgrom and oster 1987 we first present a model that illustrates how both phenomena may jointly arise due to the information revealing character of promotions using experimental labor markets we find evidence consistent with asymmetric employer information being a causal factor for both inefficient promotions and large wage increases upon promotion furthermore we analyze the effect of asymmetric employer information on profits and turnover

the importance of lifetime jobs in the u s economy though the u s labor market is justly notorious for high turnover and consequent high unemployment it also provides stable near lifetime employment to an important fraction of the labor force this paper investigates patterns of job duration by age race and sex with the following major conclusions 1 the typical worker today is holding a job which has lasted or will last about eight years over a quarter of all workers are holding jobs which will last twenty years or more sixty percent hold jobs which will last five years or more 2 the jobs held by middle aged workers with more than ten years of tenure are extremely stable over the span of a decade only twenty to thirty percent come to an end 3 among workers aged thirty and above about forty percent are currently working in jobs which eventually will last twenty years or more three quarters are in jobs which will last five years or more 4 the duration of employment among blacks is just as long as among whites even though the jobs held by blacks are worse in almost every other dimension they are no more unstable than those held by whites 5 women s jobs are substantially shorter than men s on the average only about a quarter of all women over the age of thirty are employed in jobs which will last over twenty years whereas over half of men over thirty are holding these near lifetime jobs this abstract was borrowed from another version of this item

the cost of job loss this article identifies an equilibrium theory of wage formation and endogenous quit turnover in a labour market with on the job search where risk averse workers accumulate human capital through learning by doing and lose skills while unemployed optimal contracting implies the wage paid increases with experience and tenure indirect inference using german data determines the deep parameters of the model the estimated model not only reproduces the large and persistent fall in wages and earnings following job loss a new structural decomposition finds foregone human capital accumulation while unemployed is the worker s major cost of job loss

the effect of job tenure on wage offers a wage offer can be either acceptable or unacceptable to a worker but in cross sectional and panel data only acceptable wage offers are observed an ols wage equation will not reveal how job tenure affects wage offers but rather will reveal how tenure affects acceptable wage offers by jointly modeling the firm s determination of the wage offer and the worker s decision to accept or reject the offer we are able to estimate the effect of job tenure on wage offers consistently in contrast to the usual ols results we find that job tenure has no statistically significant effect on wage offers

mobility and wages abstract we show that even for the simplest job search model the effect of mobility on wages depends on the distribution of wage offers and the cost of job changes the effect for symmetric wage distributions is derived

human capital vs signalling explanations of wages increases wages by directly increasing the worker s productivity this learning explanation is usually associated with human capital theory however it seems unlikely that learning explains all the wage differences associated with schooling and work history better educated workers are not a random sample of workers they have lower propensities to quit or to be absent are less likely to smoke drink or use illicit drugs and are generally healthier it is unlikely that employers make full use of differences in propensities to quit or to be absent or sick when hiring workers these characteristics are often not directly observed and the americans with disabilities act precludes firms from using either poor health or the likelihood of future sickness as a hiring criterion unless it is directly related to job performance however if low levels of education are associated with these unfavorable employee characteristics and employers are allowed to take education into account when hiring workers we would expect employers to favor better educated workers as a means of reducing their costs of sickness and job turnover in turn students will take these hiring criteria into account when deciding how long to stay in school students will choose a length of schooling to signal their ability to employers and employers will demand a minimum level of schooling

tenure unions and the relationship between employer size and wages the unionization rate in a worker s industry and the worker s tenure are interacted with employer size in wage regressions using current population survey data the results provide insight into the relatively small size wage relationship in the union sector nonunion tenure profiles steepen sharply with establishment size while union profiles flatten also the effect of industry unionization increases with firm size in the nonunion sector a pattern indicative of threat effects a separate analysis of nonunion wages indicates that size wage relationships are stronger in occupations associated with high monitoring costs

wage risk and the value of job mobility in early employment careers this paper shows that job mobility is a valuable channel that employed workers use to mitigate bad labor market shocks i estimate a model of wage dynamics jointly with a dynamic model of employmen