Publication Date: 1981 Chapter Title: Labor Mobility and Wages

In this essay we explore the implications of human capital and search behavior for both the interpersonal and life cycle structure of interfirm labor mobility. The economic hypothesis which motivates the analysis is that individual differences in firm-specific complementarities and related skill acquisitions produce ‘differences in mobility behavior and in the relation between job tenure, wages, and mobility. Both “job duration dependence ” and “heterogeneity bias ” are implied by this theory. Ex-ploration of longitudinal data sets-National Longitudinal Surveys (NLS) and Michigan Income Dynamics (MID)-which contain mobility, job, and wage histories of men in the 1966-76 decade yield the following findings, among others: 1. The initially steep and later decelerating declines of labor mobility with working age are in large part due to the similar but more steeply declining relation between mobility and length of job tenure. 2. Given tenure levels, the probability of moving is predicted posi-tively by the frequency of prior moves and negatively by education. The inclusion of prior moves in the regression reduces the estimated tenure slope because it helps to remove the “heterogeneity bias ” in that slope. 3. The popular “mover-stayer model ” is rejected by the existence of tenure effects on mobility