EMPIRICAL-ANALYSIS OF OCCUPATIONAL HIERARCHIES

Using data on U.S. engineers and the position of engineering jobs with in firms, this paper estimates a model of hierarchies within firms. Th e model extends Rosen's (1982) model of recursive production to two sk ills and multiple hierarchy levels. The model generates an empirical m odel that is nested within a general Roy (1951) model of self-selectio n. Maximum likelihood estimates of the parameters of the production te chnology and the skill-experience profiles are estimated. The results suggest that approximately two-thirds of changes in employment shares across hierarchy levels across time are explained by demographic shift s in the stock of engineering skills. Most of the returns to experienc e and to assignment to higher hierarchy levels within firms are caused by skill accumulation and self-selection rather than technological di fferences across hierarchy levels.