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One phenomenon that has received considerable scrutiny is the persistent, voluntary job mobility of young workers. In the mid 1970s, economists began using search-theoretic models to explain why information costs compel workers to systematically "shop" for a better job. The idea is that workers cannot immediately locate firms where their skills are valued the most highly, so upon accepting a job offer they continue to search for an even better outside opportunity. Workers might also learn over time that their current job is not as productive as they initially predicted. New information regarding outside offers or the current job is predicted to lead to a worker-initiated job separation. Empirical researchers have used longitudinal data to determine which theoretical models are supported by the data and to identify the contribution of "job shopping" to life-cycle wage growth.

A related issue of long-standing concern is the effect of job immobility on wage growth. Human capital models predict that wages rise with job seniority when workers "lock in" and invest in firm-specific skills. Because these skills cannot be transferred to a new job if a separation occurs, workers and firms agree to share the costs and benefits of the investment--and the worker's return on the shared investment takes the form of within-job wage growth above and beyond any gains due to the acquisition of general (transferable) skills. A variety of agency models provide alternative explanations for upward sloping wage-tenure profiles. In these models, employers defer wages as a means of discouraging workers from quitting or shirking; stated differently, they require workers to "post a bond" as an incentive to sustain the employment relationship. Longitudinal data have proved to be essential for assessing the merits of these theoretical models and identifying the effect of tenure on wages.