Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Poster Paper: Job Separation Post and Pre Great Recession in the US: Evidence from the Survey of Income and Program Participation

Saturday, November 14, 2015
Riverfront South/Central (Hyatt Regency Miami)

*Names in bold indicate Presenter

Bocar A Ba, University of Chicago
This paper studies the effect of dynamic selection on wage profiles and seniority.

Using tools from the selection literature and duration analysis, the proposed approach

helps identify both one’s selection into employment and his tenure through: (1) the

competing risks model, which helps identify how duration dependence (pure and unobserved

heterogeneity) affects labor market transitions; and (2) stock and flow samples,

which provide an intuitive set-up to compare short and long termed tenured workers.

By utilizing these tools to account for tenure selectivity, one is able to make better

predictions compared with models which only account for selection into employment.

I find that longer tenure yields higher wages that can be explained by higher mobility

costs or firm specific human capital; whereas, individuals with shorter tenure have

lower wages and a higher propensity to separate. Such empirical findings are consistent

with the research conducted by Becker [1962] and Jovanovic [1979]. Additionally, this

paper argues that methods that ignore the presence of flow and stock samples data

result in wrong predictions for individuals experiencing short tenure or unemployment