TY - UNPB

T1 - How Worker Productivity and Wages Grow with Tenure and Experience

T2 - The Firm Perspective

AU - Caplin, Andrew

AU - Lee, Minjoon

AU - Leth-Petersen, Søren

AU - Sæverud, Johan

AU - Shapiro, Matthew

PY - 2022

Y1 - 2022

N2 - How worker productivity evolves with tenure and experience is central to economics, shaping, forexample, life-cycle earnings and the losses from involuntary job separation. Yet, worker-levelproductivity is hard to identify from observational data. This paper introduces direct measurementof worker productivity in a firm survey designed to separate the role of on-the-job tenure fromtotal experience in determining productivity growth. Several findings emerge concerning theinitial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistentwith wages not being allocative period-by-period.(2) Previous experience is a substitute, but a farless than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs inthe extent to which previous experience substitutes for tenure. The survey makes use ofadministrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters notmeasured in the survey.

AB - How worker productivity evolves with tenure and experience is central to economics, shaping, forexample, life-cycle earnings and the losses from involuntary job separation. Yet, worker-levelproductivity is hard to identify from observational data. This paper introduces direct measurementof worker productivity in a firm survey designed to separate the role of on-the-job tenure fromtotal experience in determining productivity growth. Several findings emerge concerning theinitial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistentwith wages not being allocative period-by-period.(2) Previous experience is a substitute, but a farless than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs inthe extent to which previous experience substitutes for tenure. The survey makes use ofadministrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters notmeasured in the survey.

U2 - 10.3386/w30342

DO - 10.3386/w30342

M3 - Working paper

T3 - National Bureau of Economic Research. Working Paper Series

BT - How Worker Productivity and Wages Grow with Tenure and Experience

ER -