We develop and estimate an equilibrium job search model of worker careers, allowing for human capital accumulation, employer heterogeneity and individual-level shocks. Career wage growth is decomposed into the contributions of human capital and job search, within and between jobs. Human capital accumulation is largest for highly educated workers, and both human capital accumulation and job search contribute to the observed concavity of wage-experience profiles. The contribution from job search to wage growth, both within- and between-job, declines over the first ten years of a career- the `job-shopping' phase of a working life - after which workers settle into high-quality jobs and use outside offers to generate gradual wage increases, thus reaping the benefits from competition between employers.
Authors
Research Fellow Sciences Po and University College London
Jean-Marc is a Research Fellow of the IFS and a Professor of Economics at Sciences Po, Paris, and University College London.
Jesper Bagger
Francois Fontaine
Working Paper details
- DOI
- 10.1920/wp.cem.2014.1214
- Publisher
- Cemmap
Suggested citation
J, Bagger and F, Fontaine and J, Robin. (2014). Tenure, experience, human capital and wages: a tractable equilibrium search model of wage dynamics. London: Cemmap. Available at: https://ifs.org.uk/publications/tenure-experience-human-capital-and-wages-tractable-equilibrium-search-model-wage (accessed: 25 April 2024).
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