2006): “The returns to seniority in France (and why are they lower than

In this article, we estimate a joint model of participation, mobility, and wages in France. Our statistical model allows us to distinguish between unobserved person heterogeneity and state-dependence. The model is estimated using bayesian techniques using a long panel (1976-1995) for France. Our results show that returns to seniority are small, even close to zero for some education groups, in France. Because we use the exact same specification as Buchinsky, Fougère, Kramarz and Tchernis (2002), we compare their results with ours and show that returns to seniority are (much) larger in the United States than in France. This result also holds when using Altonji and Williams (1992) techniques for both countries. Most differences between the two countries relate to firm-to-firm mobility. Using a model of Burdett and Coles (2003), we explain the rationale for this. More precisely, in a low-mobility country such as France, there is little gain in compensating workers for long tenures because they will eventually stay in the firm; even when they hold firm-specific capital. But, in a high-mobility country such as the United States, high returns to seniority have a clear incentive effect