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Understanding Wage Growth: Estimating and Testing Learning-by-Doing

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  • Philippe Belley

Abstract

I adapt the basic insight from the literature that tests the permanent-income theory to test the learning-by-doing (LBD) model of human capital accumulation. I propose three measures of workers’ incentives to accumulate skills. These incentives correlate with wage growth conditional on hours worked and past wages, implying that significant components of wage growth are not accounted for by the LBD model. This suggests that wage growth is costly and that workers face a trade-off between current and future earnings. This trade-off has ramifications for wage subsidy policies and for understanding women’s decisions about children and career.

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  • Philippe Belley, 2017. "Understanding Wage Growth: Estimating and Testing Learning-by-Doing," Journal of Human Capital, University of Chicago Press, vol. 11(2), pages 213-246.
    • Handle: RePEc:ucp:jhucap:doi:10.1086/691699
    DOI: 10.1086/691699
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    Cited by:

    1. Magnac, Thierry, 2023. "Capital humain et recherche d'emploi: un mariage heureux - Human Capital and Search Models: A Happy Match," TSE Working Papers 23-1489, Toulouse School of Economics (TSE).
    2. Hana Kuèerová, 2021. "The Influence of the Quality of Education on the Knowledge Economy: the Czech Republic in International Comparison," ACTA VSFS, University of Finance and Administration, vol. 15(1), pages 93-112.
    3. Magnac, Thierry & Roux, Sébastien, 2021. "Heterogeneity and wage inequalities over the life cycle," European Economic Review, Elsevier, vol. 134(C).

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