Wages, mobility and firm performance: Advantages and insights from using matched worker-firm data

To illustrate the wide applicability of longitudinal matched employer-employee data, we study the simultaneous determination of worker mobility and wage rates using an econometric model that allows for both individual and firm-level heterogeneity. The model is estimated using longitudinally linked employer-employee data from France. Structural results for mobility show remarkable heterogeneity with both positive and negative duration dependence present in a significant proportion of firms. The average structural returns to seniority are essentially zero, but this result masks enormous heterogeneity with positive seniority returns found in low starting-wage firms.