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Wage Premia for Newly Hired Employees: Theory and Evidence

Patrick Kampkötter and Dirk Sliwka

No 5538, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate wage differences between newly hired and incumbent employees. We show in a formal model that when employees care for wages as well as match-specific utility, incumbents earn less than new recruits if and only if firm-specific human capital is not too important. The existence and structure of these wage premia is then investigated empirically using detailed personnel data from a large number of banks. We find that, on average, new hires earn more than comparable incumbent colleagues on the same job. But the size of the wage premia varies between jobs and indeed strongly depends on a measure of human capital specificity.

Keywords: job mobility; wage premia; human capital; new hires; wages (search for similar items in EconPapers)
JEL-codes: J31 J44 J62 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011-02
New Economics Papers: this item is included in nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Labour Economics, 2014, 31, 45–60

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