Old and New Jobs: Understanding Wage Formation, Sorting, and Firm Behavior

This project studies how firms’ prior employment experience in an occupation shapes hiring, wage setting, and post-hire outcomes. Using matched employer-employee data from Sweden, I distinguish between hires into occupations the firm has previously employed and hires into occupations that are new to the firm. The central idea is that firms have less occupation-specific knowledge when they recruit into roles they have not previously employed. In those cases, firms may know less about the requirements of the job, the productivity of potential matches, and the kinds of workers who are most likely to succeed. This makes the firm’s own employment history within an occupation an important but overlooked determinant of wage setting and worker sorting.

Empirically, I exploit within-firm variation in job novelty at the time of hiring to compare workers entering occupations that are new to the firm with workers entering occupations that are already established within the same firm-year. I then study how these differences evolve as firms accumulate experience in the occupation, and whether they are stronger when the newly introduced occupation is less similar to the firm’s existing occupational structure. More broadly, the project contributes to the literature on hiring frictions, worker sorting, and wage inequality by highlighting a within-firm source of heterogeneity in hiring and pay: otherwise similar workers may face different wage-setting environments depending on whether they enter familiar or unfamiliar occupations within the firm.