Employee Heterogeneity and Within-Firm Experience-Earnings Profiles

Ross Campbell

    Research output: Working paperDiscussion paper


    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.
    Original languageEnglish
    PublisherUniversity of Aberdeen
    Number of pages29
    Publication statusPublished - Dec 2006

    Publication series

    NameUniversity of Aberdeen Business School Working Paper Series
    ISSN (Print)0143-4543


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