Returns to Tenure and Experience Revisited -- Do Less Educated Workers Gain Less from Work Experience?

Helen Connolly () and Peter Gottschalk

JCPR Working Papers from Northwestern University/University of Chicago Joint Center for Poverty Research

Abstract: This paper explores whether within job and between job wage growth is lower for less-educated workers. While a simple model of heterogeneous learning ability predicts that individuals with low learning ability will have flatter wage profiles, this prediction has been largely ignored in the recent welfare reform debates. The key econometric problem in estimating returns to tenure and experience is that wages depend on the unobservable job match component, which is endogenous. We depart from the standard method for dealing with this problem in one important way. We show that this alternative implies that wages grow with the number of previous successful job matches. In our empirical work we show that this source of between job wage growth is large. Furthermore, we show that this source of wage growth, as well as the standard returns to tenure and experience, are substantially smaller for the least educated.

Date: 2001-04-11
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:wop:jopovw:224

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