Dream jobs

February 12, 2021

What makes some jobs better than others?

The positive effect that a ‘good’ job has on lifetime wage income may be due to a wage jump upon taking the job (i.e., a static effect) or to a faster wage growth after taking the job (i.e., a dynamic effect), and may depend on whether the benefits are portable to another job, as well as on the quality of the match between occupation worker’s skill and ability.

This paper uses 16 years of data on Portuguese firms, workers, and international trade. Internationally active firms experience higher sales growth relative to domestic firms and can thus provide for better experience and opportunities for managers. Internationally active firms also provide for steeper wage growth for managers (see the figure).

 

Figure: Experience-wage profiles for managers and blue-collar workers in domestic vs. internationally active firms.

Dream jobs are not the same for all workers. Managers and blue-collar workers receive higher wages in internationally active firms because of very different mechanisms. Blue collar workers benefit from wage jumps when moving to an internationally active firm while managers of those firms—and especially more able managers—benefit from higher wage growth that sticks with them even after they change jobs.

The gap between the return on international and domestic experience for managers stacks up over a 10-year horizon to a substantial 10% to 17% difference. As for blue-collar workers this gap is negligible.

Dream jobs also play a role at the aggregate level. International experience plays an important role in affecting spatial wage inequalities and the cross-sectional distribution of wages for more senior managers.

Click here to go to the paper by Giordano Mion, Luca David Opromolla, and Gianmarco I.P. Ottaviano.