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      Employee Heterogeneity and Within-Firm Experience-Earnings Profiles: A Nonparametric Analysis

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      ISSN 0143-06-08.pdf (264.8Kb)
      Publication date
      06/12/2006
      Author
      Campbell, Ross
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      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.
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      http://hdl.handle.net/2164/98
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