Returns to Work Experience in Chile

This paper studies returns to work experience in Chile, providing evidence in support of their relevance for human capital dynamics. Using the methodology proposed by Lagakos et al. (2018), several waves of the Socioeconomic Characterization Survey are exploited in order to provide a rich cross-section characterization. The findings suggest that, on average, workers maximize returns to experience throughout the initial years after entering the work force. Additional results deliver further evidence in favor of greater returns for workers with higher-educational level and for those who are employed in cognitive occupations. Furthermore, this article also provides evidence that under this criterion returns to experience exhibit a relevant gender gap in favor of male workers. In addition, it assesses how macroeconomic conditions affect the accumulation of these returns. After conducting an econometric analysis to avoid possible collinearity between age, time, and birth cohort effects, estimated returns are lower along the first years, while higher at the end of the workers' productive period. The life-cycle wage-growth profile documented by the literature for Chile is consistent with estimates for other countries with similar levels of development. Nevertheless, throughout the median of the individual's working life, returns are marginally lower than expected given the country's income level.