Are Those Paid More Really No More Productive? Measuring the Relative Importance of Tenure Versus On-The-Job Training in Explaining Wage Growth

Abstract

This paper considers the growth in wages that employees experience with increasing tenure in a given position. More specifically, the work presented in this paper seeks to determine how much of this observed wage growth can be attributed to on-the—job training and how much remains to be attributed to other factors that might cause wages to increase with tenure independently of training or productivity. The basic finding of this work is that on-the-job training appears to explain a substantial share of the total wage growth experienced in a given position. Indeed, there appears to be little wage growth remaining to be explained by other factors, once training is completed or has been held constant.