Does Changing Jobs Pay Off? The Relationship between Job Mobility and Wages
Huffman, Amanda Jeanette
Recent academic studies reveal a pronounced trend of increasing income inequality in the United States. For those policymakers concerned with increasing income inequality, wage inequality is a logical policy focus. Wage inequality analyses often focus on demographic characteristics or education; however, a more subtle consideration is job mobility, i.e., the movement of an individual from job to job throughout his career. To the extent that particular job mobility patterns are associated with higher wages, unequal opportunity for workers either to make job changes or to remain in their current jobs can contribute to wage inequality in general. In this study, I focus on the relationship between job mobility and wages in order to understand which job mobility levels are associated with the highest wages for workers at different stages of their careers. Existing academic literature suggests that job mobility is associated with positive wage returns for workers early in their careers, but that the effect diminishes as workers gain experience and positive wage returns to job tenure grow stronger. These findings indicate that the relationships between job mobility, tenure, and wages may depend upon experience. Specifically, I hypothesize that high voluntary job mobility is associated with positive wage returns for low experience workers, while high tenure is associated with positive wage gains for high experience workers. To explore these relationships, I run several regression models that control for person and year fixed effects and a variety of time-varying control variables. I find evidence of positive wage returns associated with high voluntary job mobility, which appear to diminish as workers gain experience. I also find that high tenure is positively associated with higher wages for both low and high experience workers, not just for those workers with high work experience. In terms of policy implications, these findings broadly indicate that some work patterns could result in higher average wages than others, and that a diverse portfolio of labor policies may, therefore, stand to benefit workers who are just beginning their careers, whereas policies that foster increased tenure may create the greatest opportunity for wage growth among workers later in their careers.
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