The Speed of Technological Innovation and Returns to Experience

Abstract

In this paper, we see that a worker in high-tech industry gets relatively less returns to tenure than those in low-tech industry. Using an earnings equation and classifying industries by their R&D intensity, I calculate returns to tenure and compare them by groups. The result using pooled OLS clearly shows negative impact of interaction between tenure accumulation and the speed of technological advances on wages. On the other hand, with IV-GLS, most coefficients of the tenure related variables are not statistically insignificant and require us further discussion. Many related studies have focuses on either the source of experience profile of wages or the impact of technological innovation on wages but not ones combining the two together. Therefore, although there are a couple of limitations, I believe my paper can have contribution to the labor literature that examines the roles of technological innovation on wages.