TY  - JOUR
AU  - Shaw,Kathryn
AU  - Lazear,Edward P.
TI  - Tenure and Output
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13652
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13652
L1  - http://www.nber.org/papers/w13652.pdf
N1  - Author contact info:
Kathryn L. Shaw
Graduate School of Business
Stanford University
Stanford, CA  94305-5015
Tel: 650/725-4168
Fax: 650/725-0468
E-Mail: kathryns@gsb.stanford.edu

Edward P. Lazear
Graduate School of Business
Stanford University
Stanford, CA 94305
Tel: 650/723-9136
Fax: 650/723-0498
E-Mail: lazear@stanford.edu
AB  - A key tenet of the theory of human capital is that investment in skills results in higher productivity.  The previous literature has estimated the degree of investment in human capital for individuals by looking at individual wage growth as a proxy for productivity growth.  In this paper, we have both wage and personal productivity data, and thus are able to measure of the increase in workers' output with tenure.  The data is from an autoglass company.  Most of production occurs at the individual level so measures of output are clear.  We find a very steep learning curve in the year on the job: output is 53 percent higher after one year than it is initially when hired.  These output gains with tenure are not reflected in equal percentage pay gains: pay profiles are much flatter than output profiles in the first year and a half on the job.  For these data, using wage profiles significantly underestimates the amount of investment compared to the gains evident in output-tenure profiles.  The pattern of productivity rising more rapidly than pay reverses after two years of tenure. Worker selection is also important.  Workers who stay longer have higher output levels and faster early learning.
ER  -