Productivity, seniority and wages: new evidence from personnel data
By Luca Flabbi, Andrea Ichino. 2001
125 citations recorded by the source corpus.
Wages may be observed to increase with seniority because of firm-specific human capital accumulation or because of self-selection of better workers in longer jobs. In both these cases the upward sloping wage profile in cross-sectional regressions would reflect higher productivity of more senior workers. If this were true, the observation of an effect of seniority on wages would depend on the presence of controls for individual productivity. In this paper we replicate, using personnel data from a large Italian firm, the results of the pioneering work of Medoff and Abraham (1980 and 1981) in which supervisors' evaluations were used as productivity indicators. Since the validity of supervisors' evaluations as measures of productivity has been widely criticized, we extend the work of Medoff and Abraham using different direct measures of productivity based on recorded absenteeism and misconduct episodes. Both these indicators and supervisors' evaluation suggest that the observed effect of seniority on wages does not reflect a higher productivity of more senior workers. Theories in which wages are deferred for incentive or insurance reasons are therefore more likely to explain the observed upward sloping profile.
Subfields: Demography, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/e9dfc15e8a6e83d650cbaabf2955edc8bc3f67c4
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Citations in the corpus
- The Value of Hiring through Employee Referrals (2015, background): “…wage differences alone are not enough to compute whether there are profit differences, since productivity may differ importantly from wages (e.g., Lazear, 1979; Medoff and Abraham, 1980, 1981; Flabbi and Ichino, 2001; Shaw and Lazear, 2008) and there are often multiple dimensions to productivity.”
- The Roles of Employer and Employee Characteristics for Plant Productivity (2004, methodology): “The productivity proxies that have been used include performance evaluations (Medoff and Abraham, 1980; Flabbi and Ichino, 2001 ), expected present value of life-cycle compensation as a measure of the expected present value of life-cycle productivity (Kotlikoff and Gokhale, 1992), and piece rates t”
- Skill Dispersion and Firm Productivity: An Analysis with Employer‐Employee Matched Data (2006, unknown): “The most common proxies have been the educational attainment and experience, by themselves or as the basis for the construction of more sophisticated measures of human capital.”