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Tenure, experience, human capital, and wages: a tractable equilibrium search model of wage dynamics

Authors: Jesper Bagger , Francois Fontaine , Fabien Postel-Vinay and Jean-Marc Robin
Date: 01 June 2015
Type: Journal Article, American Economic Review, Vol. 104, No. 6, pp. 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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Jesper Bagger, Francois Fontaine and Jean-Marc Robin March 2014, Tenure, experience, human capital and wages: a tractable equilibrium search model of wage dynamics, cemmap Working Paper, CWP12/14, Cemmap

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