Industry-specific capital and the wage profile: Evidence from the NationalLongitudinal Survey of Youth and the Panel Study of Income Dynamics

Using data from the National Longitudinal Survey of Youth (1979-96) and the Panel Study of Income Dynamics (1981-91), I seek to determine whether ther e is any net positive return to tenure with the current employer once we co ntrol for industry-specific capital. Including total experience in the indu stry as an additional explanatory variable, I show that the return to senio rity is markedly reduced using GLS while it virtually disappears using IV-G LS, at both the one-digit and three-digit levels. Therefore, it seems that what matters most for the wage profile in terms of human capital is industr y-specificity, not firm-specificity.