WORKER EFFORT DECISIONS AND EFFICIENT GENDER—SPECIFIC WAGE—TENURE PROFILES

Despite theoretical arguments that predict the opposite, empirical estimates of workers' returns to tenure tend to be greater for female than for male workers. This paper develops an agency model of wage contracts to explain this empirical finding. If male and female workers differ only in the expected length of their working lives, efficient wage-tenure profiles are steeper for women than men as a direct result of their shorter working life. This result implies that returns to tenure for women and men will become comparable as women's and men's labor force attachments converge.     

OPTIMAL 'MISMATCH' AND PROMOTIONS

Seeming 'mismatches' in which workers are either under-or overqualified, are shown to be optimal. From the firm's point of view, although turnover will be positively related to overqualification, training costs will be inversely related to overqualification. Further, overqualified workers constitute a pool from which promotions are made. Workers enter seeming mismatches due to search and mobility costs and because of opportunities for promotion. Estimates using a unique data set indicate that workers who are overqualified at hire receive less training and more promotions, and that workers overqualified for their current job are more likely to quit.