Estimating a Firm's Age-Productivity Profile Using the Present Value of Workers' Earnings
Open Access
- 1 November 1992
- journal article
- Published by Oxford University Press (OUP) in The Quarterly Journal of Economics
- Vol. 107 (4) , 1215-1242
- https://doi.org/10.2307/2118386
Abstract
In hiring new workers, risk-neutral employers equate the present expected value of a worker's compensation to the present expected value of his/her productivity. Data detailing how present expected compensation varies with the age of hire, therefore, embed information about how productivity varies with age. This paper infers age-productivity profiles using data on the present expected value of earnings of new hires of a Fortune 1000 firm. For each of the five occupation/sex groups considered, productivity falls with age, with productivity exceeding earnings when young and vice versa when old.Keywords
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