Job Mobility and the Careers of Young Men

Abstract

We study the joint processes of job mobility and wage growth among young men drawn from the Longitudinal Employee-Employer Data. Following individuals at three month intervals from their entry into the labor market, we track career patterns of job changing and the evolution of wages for up to 15 years. Following an initial period of weak attachment to both the labor force and particular employers, careers tend to stabilize in the sense of strong labor force attachment and increasing durability of jobs. During the first 10 years in the labor market, a typical young worker will work for seven employers, which accounts for about two-thirds of the total number of jobs he will hold in his career. The evolution of wages plays a key role in this transition to stable employment: we estimate that wage gains at job changes account for at least a third of early-career wage growth, and that the wage is the key determinant of job changing decisions among young workers. We conclude that the process of job changing for young workers, while apparantly haphazard, is a critical component of workers' move toward the stable employment relations that characterize mature careers.

Job satisfaction and quits

“…Lastly, tenure has a negative and highly significant effect on the probability of quitting, given the current wage. This finding confirms the robustness of previous observations of Topel and Ward (1992) and Galizzi and Lang (1998) on other data sets. Furthermore, the fundamental explanation given for this result is the persistence of uncertainty over the outcomes of own job and outside opportunities, which eventually generates a stable habit for own job.…”

“…Second, uncertainty eventually generates a stable habit for own job which results in the negative effect of tenure on the probability of quitting. This last effect, which confirms previous observations by Topel and Ward (1992) and Galizzi and Lang (1998), seems to be large enough to outweigh those deriving from standard job training and job matching hypotheses.…”

“…However, previous observations of Topel and Ward (1992) and Galizzi and Lang (1998) on U.S. and Italian data sets have repeatedly found a strong negative effect of tenure, given the current wage. These, once paradoxical, findings heavily suggest that the role of unsystematic adaptation and habit formation should certainly not be overlooked in the economic theory of job mobility.…”

Impact of external job mobility and occupational job mobility on earnings

“…The findings indicate that external job mobility is positively related to earnings (Lam et al, 2012;Murrell et al, 1996;Topel & Ward, 1992) while occupational mobility is negatively related to earnings (Gius, 2014;Neal, 1995). This implies that, generally employers in Malaysia are willing to give more rewards to engineers who have working experience in more than one organisation.…”

Rhineland exit?

“…Changes in individual wages have a much larger and more persistent effect on lifetime incomes (Low et al 2006). In fact, an upward or downward shock in a worker's productivity 2 today is likely to affect almost one-for-one her productivity until the date of retirement (Abowd and Card 1989;Topel and Ward 1992). Individual wages thus follow (almost) a geometric random walk.…”