Why Do Wages Increase with Tenure? On-the-Job Training and Life-Cycle Wage Growth Observed within Firms

Empirical results in this paper indicate that firm-specific wage growth occurs almost exclusively during periods of on-the-job training. This finding suggests that within-firm wage growth is mainly determined by contemporaneous productivity growth. The results provide no evidence that contractual considerations are an important source of firm-specific wage growth. Copyright 1989 by American Economic Association.