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Job Changes And Individual-Job Specific Wage Dynamics

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Executive Summary

This paper develops an error components model that is used to examine the impact of job changes on the dynamics and variance of individual log earnings. The author uses data on work histories drawn from the Panel Study of Income Dynamics (PSID) that makes possible to do the distinction between voluntary an involuntary job-to-job changes. The potential endogeneity of job mobility in relation to earnings as circumvented by means of an instrument variable estimation method that also allows controlling for unobserved individual-job specific heterogeneity.

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