Working Paper: NBER ID: w2782
Authors: Harry J. Holzer
Abstract: This paper uses data from a nationwide sample of firms on employee wages and characteristics to reexamine the determinants of employee productivity and earnings. The data include several measures of job experience, training, and both worker and firm characteristics as well as subjective employer productivity ratings and earnings of workers. Given observations on the same individual at different points in time, we can consider both levels and changes in earnings and productivity, with various firm- and job-specific effects eliminated from the latter. The results show that: 1) Both previous experience and tenure in the current job have significant, positive effects on wages and productivity. Previous experience effects are found primarily on levels of wages and productivity while tenure affects occur for both current levels and changes. 2) Hours of training are positively related to productivity and wage growth but generally not to levels of either. 3) Among demographic characteristics, we find productivity growth and current productivity levels to be slightly higher for females while their wages are significantly lower. Other determinants of earnings and productivity ratings (e.g., such as various types of incentive pay and the fraction unionized) are considered here as well.
Keywords: Employee Productivity; Earnings; Human Capital; Wages
JEL Codes: J31; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| previous experience (C92) | wages (J31) |
| previous experience (C92) | productivity (O49) |
| tenure (M51) | wages (J31) |
| tenure (M51) | productivity (O49) |
| hours of training (M53) | wage growth (J31) |
| hours of training (M53) | productivity growth (O49) |
| subjective productivity ratings (J29) | wage levels (J31) |
| perceived productivity growth (O49) | current productivity levels (E23) |
| female employees (J21) | perceived productivity growth (O49) |
| pay incentive schemes (J33) | wage levels (J31) |
| pay incentive schemes (J33) | wage changes (J31) |