Can You Teach an Old Dog New Tricks? New Evidence on the Impact of Tenure on Productivity

In this paper, we explore the impact of workers’ tenure on firm productivity, using rich longitudinal matched employer-employee data private Belgian firms. We estimate a production function augmented with firm-level measure tenure. deal endogeneity, which arises from unobserved heterogeneity and reverse causality, by applying modified version Ackerberg et al.’s (2015) control method, explicitly removes fixed effects. Consistently recent theoretical predictions, find that exhibits an inverted-U-shaped relationship respect to productivity. The existence decreasing marginal returns is corroborated in our analysis composition workforce. also differs widely across workforce dimensions. Tenure particularly beneficial for productivity contexts characterized certain degree routineness lower job complexity. Along same lines, findings indicate exerts stronger (positive) impacts industrial high capital-intensive firms, as well firms less reliant knowledge- ICT-intensive processes.