Adjustments of Wage-Tenure Profiles with Respect to Entry Age

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This paper adds a new empirical finding of the impact of workers’ entry age on wage-tenure profiles to the literature, which might be explained by human capital and deferred compensation models. I analyze two different data sets stemming from personnel records of a large German company and from German linked employer-employee data. The analyzed company employs a quite large share of older workers but does not hire many older workers. Estimated earnings functions indicate that wage-tenure profiles are adjusted with respect to entry age: workers with older entry age earn higher entry wages and have lower wage growths than younger workers. The linked employer-employee data confirm the findings from personnel records as most firms pay higher entry wages and flatter wage-tenure profiles to older new entrants. The personnel data set and the linked employer-employee data set have their advantages and disadvantages so that an analysis of both enhances the credibility of the main results.
Original languageEnglish
JournalJournal of Business Economics : JBE
Issue number2
Pages (from-to)171-191
Number of pages21
Publication statusPublished - 01.02.2013