Labor Market Dynamics in a Highly Competitive Industry

Francesco Principe and Jan C. van Ours

No 20054, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study labor market dynamics of workers in a highly competitive industry, focusing on the relationship between workers' age, wages, and productivity. Our analysis uncovers an inverse U-shaped relationship. While some wage adjustments occur within the current firm, job mobility plays a crucial role in shaping wage trajectories. There is assortative matching with highly productive workers moving to highly productive firms, while less productive workers gravitate towards less productive firms. Our findings suggest that both in-firm wage progression and wage growth via job mobility contribute to a close alignment between wages and productivity throughout workers' careers.

Keywords: Productivity; Job mobility (search for similar items in EconPapers)
JEL-codes: J31 J62 Z22 (search for similar items in EconPapers)
Date: 2025-03
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