The Importance of Obtaining a High-Paying Job
Paul Devereux
MPRA Paper from University Library of Munich, Germany
Abstract:
Given the high level of job mobility in the United States, one might think that obtaining a low-paying job would have only temporary consequences. However, using longitudinal data, I find that state dependence in wages is large and persistent. If two comparable individuals start jobs that pay a different wage, about 60% of the wage differential is still present four years later. Moreover, about 50% of the wage differential is still present for workers who have switched employers during that period. The results indicate that the jobs acquired by individuals have long- term effects on their future careers. I also examine the mechanisms that lead to state dependence. In a stigma model, prospective employers use wages as a signal of ability. Thus, getting a poor job can lead the market to believe that an individual has low ability. In the learning-by-doing model, workers who get high-paying jobs also attain greater opportunities to acquire human capital. The evidence suggests that both stigma and learning by doing models contribute to state dependence in wages.
Keywords: state dependence; wage dynamics (search for similar items in EconPapers)
JEL-codes: J0 J30 (search for similar items in EconPapers)
Date: 2002-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/49326/1/MPRA_paper_49326.pdf original version (application/pdf)
Related works:
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:pra:mprapa:49326
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().