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Training, Tenure, and Productivity

Lichtenberg, Frank R., "Training, Tenure, and Productivity" (May 1981). NBER Working Paper No. W0671. Available at SSRN:


    There is substantial evidence from the literature on individual wage determination that length of service to the firm is an important determinant of earnings and thus of labor productivity, holding constant employee attributes such as age, sex and education. Earnings growth associated with increased tenure is usually interpreted as a reflection of firm-specific on-the-job training (OJT). In this paper a model of producer technology consistent with the hypothesis of firm-specific OJT is formulated and estimated. Empirical implementation of the model on data for U.S. manufacturing provides the basis for estimation of the marginal productivity of workers classified by length of service to the firm, i.e., of the tenure-productivity profile. The parameter estimates also enable us to determine the effect of recent changes in the tenure distribution (due to changes in labor turnover behavior) on manufacturing productivity performance.
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