Tenure and output

Kathryn Shaw and Edward Lazear

Labour Economics, 2008, vol. 15, issue 4, 704-723

Abstract: A key tenet of the theory of human capital is that investment in skills results in higher productivity. The previous literature has estimated the degree of investment in human capital for individuals by looking at individual wage growth as a proxy for productivity growth. In this paper, we have both wage and personal productivity data, and thus are able to measure of the increase in workers' output with tenure as evidence of the degree of learning on the job. The data is from an autoglass company. Most of production occurs at the individual level so measures of output are clear. We find a very steep learning curve in the first eight months on the job: output is 53 percent higher after eight months than it is initially. Our data show that these output gains with tenure are not reflected in equal percentage pay gains: pay profiles are much flatter than output profiles in the first year and a half on the job. For these data, using wage profiles significantly underestimates the amount of investment compared to the gains evident in output-tenure profiles. The pattern of productivity rising more rapidly than pay reverses after two years of tenure, although our evidence on this point is less reliable. Worker selection is also important. Workers who stay longer have higher output levels and faster early learning.

Keywords: Productivity; Age-earnings; profile; Tenure; Firm; specific; skills (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927-5371(07)00086-3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Tenure and Output (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:15:y:2008:i:4:p:704-723

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().