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Journal Article

Seniority, experience, and wages in the UK

Authors

Publication date

2009

Abstract

This paper uses BHPS data to investigate the relative importance of seniority and experience in determining male wages in the UK labor market. Using both the Altonji and Shakotko instrumental variable and the Topel two-step estimation approaches, I find that for all male workers, tenure plays a modest role, increasing wages by about 1 percent each year over the first 10 years on the job. General labor market experience has a larger role, so that after 30 years wages have increased by about 60 percent. Individual and job match heterogeneity are important, and should be carefully modeled when estimating wage equations for the British labor market. These results are remarkably similar to the most recent evidence about these relationships in the US labor market. After extending the standard model to include industry and occupation experience, the estimated impact of job seniority becomes negligible for nonunion workers. Instead, the wages of nonunion workers rise because of the accumulation of general and sector-specific experience. The wages of union workers are still found to increase with job seniority over the first ten years with their employer, suggesting that if seniority matters for wages it is only for union workers.

Published in

Labour Economics

Volume

16 (3):272-283

DOI

http://dx.doi.org/10.1016/j.labeco.2008.09.003

Subjects

Labour Economics and Wages And Earnings

Links

http://serlib0.essex.ac.uk/record=b1650556~S5

Notes

Web of Knowledge alert; Previously 'In press, corrected proof' 10 Oct 2008; Albert Sloman Library Periodicals *restricted to Univ. Essex registered users*

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