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James L. Medoff, Katharine G. Abraham
NBER Working Paper No. 618
Issued in 1981
NBER Program(s): LS
---- Abstract -----
This study discusses newly collected data concerning the role played by seniority in U.S. firms' termination and promotion decisions. The new information, based on 561 usable responses to a nation-wide survey of companies conducted by the authors, sheds light on two key questions: For what percentage of U.S. private sector employees (outside of agriculture and construction) is seniority -- per se (that is, seniority independent of current performance) rewarded in promotion decisions? For what percentage does protection against job loss grow with seniority even when current value to the firm does not? While there appear to be important differences for hourly versus salaried employees and for those covered by collective bargaining versus those not so covered, the new evidence presented strongly supports the claim that seniority independent of productivity plays a major role in the compensation and termination decisions affecting all employee groups at most U.S. workplaces.
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