Job mobility and hourly wages: is there a relationship?

Unemployment Insurance (UI) wage records allow a detailed look at the functioning of the labor market.(1) Researchers used this database to examine statistical and economic relationships between job and worker flows. For example, using UI wage records for the State of Maryland, S. Burgess and others found. that new hires are not limited to expanding firms; separations are not limited to shrinking firms; and workers flow (sum of hires and separations) is substantial.(2) It is estimated that new hires and separations each account for about 20 percent of total jobs in an average quarter in Minnesota.(3) These findings on the reallocation of jobs and workers are important, but they provide no information on the causes of these flows. In particular, what about the relationship between job mobility and wages? S.H. Farber, using data from the Current Population Survey to study job changes, observed that most new jobs are of a short duration and the probability of job change diminishes with tenure.(4) This suggests that there may be differences in wages offered by firms over the duration of a job-specifically, there is a positive correlation between wages and tenure. In other words, workers earning high wages exhibit high tenure and change jobs less frequently, compared with workers earning low wages. How much does a new hire earn? What are the wages of jobs in which separations occur? This article provides some evidence to illuminate the relationship between job mobility and wages. The analysis is based on a linked employer-employee database involving UI wage records for Minnesota. Because the Minnesota UI wage records include, among other variables, hours worked, the data are appropriate for studying this relationship. This article presents estimates of entry jobs, exit jobs, and continuing jobs, as well as their hourly wage distributions in Minnesota, and addresses how these jobs and wage distributions differ across industries and establishment size classes.