Journal Article

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

Date: 01 June 2015
Publisher: American Economic Association
Published in: American Economic Review , Vol. 104, No. 6, pp. 1551-96
DOI: 10.1257/aer.104.6.1551

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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