Controlling for Demand Side Factors and Job Matching: Maximum Likelihood Estimates of the Returns to Seniority Using Matched Employer-Employee Data.

In this paper, we match firm data to work history files in order to simultaneously estimate the wage and employment duration processes of a longitudinal sample of two million French workers employed in roughly one million firms and followed over twenty years. We use the particular structure of the data set to distinguish the impact of job search and labor demand indicators on wages and employment at the job level for the first time. Our model allows for correlated individual and job unobserved heterogeneity. Controlling for job matching, we find that returns to seniority are close to zero.