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Title: Employee Heterogeneity and Within-Firm Experience-Earnings Profiles: A Nonparametric Analysis
Authors: Campbell, Ross
Issue Date: 6-Dec-2006
Series/Report no.: University of Aberdeen Business School Working Paper Series
Abstract: Abstract Motivated by a priori uncertainty with respect to the parametric specification of the earnings function, I model the earnings function as semiparametric partially linear model and follow the estimation approach described in Robinson (1988). Using data from the personnel records of a large major UK based financial sector employer, I let years of within-firm and pre-firm experience form the nonparametrically modelled component of the earnings function. It is shown that the estimated within-firm experience earnings profiles, which are conditional upon a given number years of pre-firm experience accumulated before entry, converge and even overtake as years of pre-firm experience increases. This result can be explained with the recognition of unobservable explanatory variables, such as the match and individual quality of the employees, both of which are a function of years of within- and pre-firm experience and wages.
ISSN: 0143-4543
Appears in Collections:Business research
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