Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/20172 
Year of Publication: 
2003
Series/Report no.: 
IZA Discussion Papers No. 935
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper replicates studies by Medoff and Abraham (1980, 1981) and Flabbi and Ichino (2001) using personnel data from the Dutch national aircraft manufacturer Fokker. It shows how a formal salary system, as is widely used by large firms, brings about that seniority-wage profiles are largely independent of controls for reported performance in cross-sectional wage regressions even though supervisors' evaluations shape life-cycle earnings profiles. Performance ratings determine how fast a worker climbs the firm's career and wage ladder. The paper also reveals that real wage growth depends on the employer's prosperity. Furthermore it demonstrates that formal salary systems cause serial correlation in wage growth and 'Green Card' effects.
Subjects: 
formal salary systems
returns to seniority
internal labor markets
personnel economics
JEL: 
M52
J31
J30
Document Type: 
Working Paper

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