Old and new jobs: Understanding wage formation, sorting and firm behavior

This paper studies hiring and wage setting in new jobs. Using Swedish matched employer-employee data covering 1.7 million new hires, I show that entrants into occupations new to the firm have more labor market experience and are more likely to be hired from other employers. Conditional on entrant characteristics, new jobs have a 3 percent entry-wage premium and exhibit lower turnover than old jobs. The premium declines as firms accumulate occupation-specific employment experience, consistent with hiring uncertainty that resolves as the firm gains experience in the occupation. The new job wage premium is a previously undocumented source of wage dispersion among similar workers.