As it's stated in the JPA 2.2 specification (see section 8.2.1.6.3 Jar Files):
One or more JAR files may be specified using the jar-file elements instead of, or in addition to the mapping files specified in the mapping-file elements. If specified, these JAR files will be searched for managed persistence classes, and any mapping metadata annotations found on them will be processed, or they will be mapped using the mapping annotation defaults defined by this specification. Such JAR files are specified relative to the directory or jar file that contains[91] the root of the persistence unit.[92]
...
[91] This semantics applies to persistence.xml files written to the persistence_2_0.xsd or later schema. Due to ambiguity in the Java
Persistence 1.0 specification, provider-specific interpretation of the relative references used by this element may apply to earlier versions.
[92] Persistence providers are encouraged to support this syntax for use in Java SE environments.
Your case looks like the Example 1 from the specification:
app.ear
lib/earEntities.jar
earRootPUnit.jar (with META-INF/persistence.xml )
persistence.xml contains: <jar-file>lib/earEntities.jar</jar-file>
But if you use JPA 1.0 it looks like you should check related part of the provider-specific documentation.