Returns to Tenure: A Critical Assessment of the Evidence and Interpretation

Nikolaos Theodoropoulos and Carl Singleton

No 18705, IZA Discussion Papers from IZA Network @ LISER

Abstract: This paper assesses the empirical evidence on returns to employer tenure. Using published studies and new illustrative estimates from British linked employer–employee payroll data, we show that estimated wage–tenure profiles vary substantially across data sources, wage measures, samples, and empirical specifications. We argue that this reflects a deeper issue: tenure coefficients should not be interpreted mechanically as causal returns to firm-specific human capital, since they may capture broader features of the employment relationship and the wage-setting environment. The literature on returns to tenure is best understood as delivering context-dependent empirical parameters, rather than convincing evidence for a single stable causal effect of remaining with the same employer.

Keywords: Seniority; Wages; Employer-employee data; Mincer wage equation (search for similar items in EconPapers)
JEL-codes: C23 J31 J63 (search for similar items in EconPapers)
Date: 2026-06
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp18705

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