How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective

Andrew Caplin, Minjoon Lee, Søren Leth-Petersen, Johan Saeverud and Matthew Shapiro
Additional contact information
Andrew Caplin: New York University and NBER
Johan Saeverud: University of Copenhagen

No 22-11, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: How worker productivity evolves with tenure and experience is central to economics, shaping, for example, life-cycle earnings and the losses from involuntary job separation. Yet, worker-level productivity is hard to identify from observational data. This paper introduces direct measurement of worker productivity in a firm survey designed to separate the role of on-the-job tenure from total experience in determining productivity growth. Several findings emerge concerning the initial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistent with wages not being allocative period-by-period. (2) Previous experience is a substitute, but a far less than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs in the extent to which previous experience substitutes for tenure. The survey makes use of administrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters not measured in the survey.

Keywords: Productivity; Wages; Tenure; Experience; Firm survey (search for similar items in EconPapers)
JEL-codes: E24 J24 J30 (search for similar items in EconPapers)
Pages: 54
Date: 2022-09-11
New Economics Papers: this item is included in nep-bec, nep-eff, nep-eur, nep-hrm, nep-lma, nep-ltv and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective (2022)
Working Paper: How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective (2022)
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