Publications (2)0 Total impact
ABSTRACT: We estimate a model of the joint participation and mobility along with the individuals' wage formation in France. Our model makes it possible to distinguish between unobserved person heterogeneity and state-dependence. We estimate the model using state of the art Bayesian methods employing a long panel (1976-1995) for France. Our results clearly show that returns to seniority are small, and for some education groups are close to zero. The specification here is the same as that used in Buchinsky, Fougère, Kramarz and Tchernis (2002) for the case of the United States, where the returns to seniority were found to be quite large. This result also holds when using the method employed by Altonji and Williams (1992) for both countries. It turns out that differences between the two countries relate to firm-to-firm mobility. Using a model of Burdett and Coles (2003), we explain the rationale for this phenomenon. Specifically, in a low-mobility country such as France, there is little gain in compensating workers for long tenures because they tend to stay in the firm for most, if not all, of their career. This is true even in cases where individuals clearly possess substantial amount of firm-specific human capital. In contrast, for a high-mobility country such as the United States, high returns to seniority have a clear incentive effect, and firms are induced to pay the premium associated with firm-specific human capital to avoid losing their most productive workers.
ABSTRACT: This Paper uses a new data set drawn from official earnings records kept by the French national statistical agency, INSEE, and builds a time series on various mobility indices for the first time. Using six mobility concepts, we chart wage mobility trends for the working population and compare mobility rates in various population subgroups differentiated by gender, and education. We then compare mobility trends over time for each population subgroup. Next, we relate the extent of mobility using each of these concepts to measures of macroeconomic conditions including GNP growth, unemployment, inflation, and change in the minimum wage. The results show that the answers to even the most fundamental of mobility questions depend on the mobility concept used. Specifically, we find: over time, income mobility in France has risen for some concepts and fallen for others; comparing genders, women have higher income mobility for some concepts and lower income mobility for others; looking across educational groups, for some mobility concepts it is the best-educated workers who have the highest mobility, while for other concepts, it is the least-educated; in general, the indices are affected by demographic variables, macroeconomic conditions, and changes in employment composition, but these patterns are not uniform across the different concepts; changes in ranks track only imperfectly changes in francs, and the relationships are far from linear. The implication is that before labour economists ‘do a mobility study,’ they need to be very clear about the mobility concept or concepts they wish to study. As our work shows, the choice can and does make a vital difference.