Cohort effects within the firm: new evidences from China

ABSTRACT

Using comprehensive personnel data from a Chinese firm, we confirm significant cohort effect in our sample. Complementary to the existing literature, we have two new findings: First, cohort effect only exists among workers with low initial job levels and it disappears in senior managers. Second, the job position upon entering the firm accounts for half of the cohort effects, supporting the task-specific human capital theory.

KEYWORDS:

• Wage
• cohort effect
• task-specific human capital
• internal labour market

JEL CLASSIFICATION:

• J30
• J41
• M52

Acknowledgments

Hong Zhang acknowledges financial support from the National Natural Science Foundation of China (Grant No. 71703054), the Fundamental Research Funds for the Central Universities (No.19JNKY07) and Industrial Big Data and Economic Decision-making Laboratory of Jinan University (20JNZS41). Xiaoquan Wang acknowledges financial support from the National Natural Science Foundation of China (Grant No. 71902062). All errors are our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Individual fixed effect estimation is not used here, because the key variable $CohortWag{e}_i$ is unchanged with years whose coefficients would not be estimated in an individual fixed effect estimation.

² Jobs in the firm are classified vertically into 10 levels. Levels 1 and 2 consist of rank-and-file positions: junior employee and senior employee, respectively. Level 3 and above are managerial levels: head of team, senior head of team, managers, senior managers, and higher-level positions up to vice president.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71703054,71902062]; Fundamental Research Funds for the Central Universities [19JNKY07]; Industrial Big Data and Economic Decision-making Laboratory of Jinan University [20J NZS 41].