The determinants of the earnings distribution have received widespread attention in recent years. The main innovation of this renewed interest in the determination of earnings has been the development of a human capital framework to explain the characteristics of the income distribution. Essentially, it is assumed that variations in earnings over time are caused by changes in the individual’s net human capital stock, the end>odied knowledge and skills useful in the labor market.
Many studies have shown that the pattern of earnings over the life cycle can be explained by the time profile of investment in human capital.^-Mainly because of data limitations these studies have refrained from analyzing the effects of job mobility on the life cycle distribution and volume of human capital investments. The recent emergence of longitudinal data sets allows the researcher to study the relationship between the job history of the individual and the level of current earnings. easy payday loans online
The objective of this paper is to analyze the effects of job mobility on the cross-sectional distribution of earnings. It will be argued that job mobility has two effects on earnings. The first effect is on the level of the earnings profile through wage gains due to job mobility. This effect has been documented In the literature and Is usually strongly positive for quits and nonpositive for layoffs. A second effect, that of mobility on the slope of the earnings profile, has been Ignored In the literature. I will argue that by creating disincentives for Investments In human capital due to the fact that some specificity exists In on-the-job training, Job mobility will tend to flatten the slope of the earnings profile. This paper can be viewed as an attempt to empirically document this effect of job mobility on earnings. Part II of the paper presents the theoretical framework as well as an expansion of the human capital earnings function to allow for the estimation of this effect. Part III gives an extensive empirical analysis using the National Longitudinal Survey (NLS) of Mature Men. In Part IV, the empirical analysis Is briefly replicated on the NLS of Young Men. Part V summarizes the empirical findings of the study.