Working Paper: CEPR ID: DP2710
Authors: Michelle Haynes; Richard Upward; Peter Wright
Abstract: The proposition that labour market adjustments to intra-industry trade are less costly than adjustments to inter-industry trade is a widely-held belief amongst trade economists. If it is the case that there are significant sector-specific skills, then this ?smooth adjustment hypothesis? seems intuitive. However, direct evidence relating to this issue remains largely anecdotal. In this Paper we adopt the methodology of the micro-econometric labour literature to estimate the returns to tenure within firms, industries and occupations in order to predict the costs, in terms of wage losses, of moving jobs between and within sectors. To do this we use a large panel of individual workers for the UK over a long period (1975?1998), which enables us to control for unobserved fixed effects which may jointly determine the propensity to move jobs and the wage level.
Keywords: Industry Specific Skills; Mobility; Smooth Adjustment; Tenure; Wages
JEL Codes: C33; F16; J30; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| job tenure (M51) | wages (J31) |
| industry tenure (M51) | wages (J31) |
| occupational tenure (J63) | wages (J31) |
| occupational tenure (J63) | industry tenure (M51) |
| job tenure (M51) | firm tenure (G32) |
| moving jobs within industries (J62) | moving jobs between industries (J62) |
| returns to occupational tenure (J63) | returns to industry tenure (J63) |