In this study we focus on differences in careers and wage development between white-collar workers. We are interested in the questions of which factors contribute to these differences and at what stage of the career they occur. Furthermore, we investigate the wage effects of the different types of observed mobility. In the theoretical part of the study, models of job mobility and theories of wage and promotion dynamics inside firms are combined with the human capital theory. The descriptive analysis, on the other hand, examines the frequencies and the importance of different job transitions. In the econometric part of the study, we estimate the probability of a change of employer as well as the probability of being promoted using linear probability and multinomial logit models. Finally we examine the wage effects of job transitions. The data comes from the Confederation of Finnish Industries (EK) and covers the period 1981 to 2006. The results indicate that educational choices are of considerable importance for the future career development of manufacturing white-collar workers. The higher educated not only start their careers from more demanding jobs than the less educated, but they also experience promotions more quickly. The field of education matters as well. White-collar workers with a degree in technology are more likely to ascend to more demanding jobs than those with a business education. We also find that the early career is very important for later career development. The promotion probability is highest during the first three years of tenure and for less than 30-year-olds. The transition rates differ also by gender. Women are less often promoted than men, and they are also less likely to change employers. Furthermore, white-collar males experience larger wage increases when promoted. Finally, besides mobility within firms, also employer changes have typically positive effects on wages. Employer changes are more likely among highly educated white-collar workers who are well paid at their current job and who perform demanding tasks. Mobility across firms typically takes place early in the whitecollar's career, when the corresponding wage gains are also largest.
career development internal labor markets job mobility human capital wage formation