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Differences in Wage Growth by Education Level: Do Less-Educated Workers Gain Less from Work Experience?

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  • Connolly, Helen

    ()
    (Luxembourg Income Study)

  • Gottschalk, Peter T.

    ()
    (Boston College)

Abstract

This paper revisits the old question of whether wage growth differs by education level. Do more educated workers invest more than less educated workers in firm specific, sector specific or general human capital? Do they gain more from improved job match? The paper makes both a methodological and a substantive contribution by offering an alternative strategy for separately identifying returns to general experience, sector specific experience, firm tenure, and job match. Our empirical results, based on the Survey of Income and Program Participation, show that overall wage growth is higher for more-educated workers. This reflects higher returns to general experience for college graduates and higher returns to sector experience for high school graduates. Improvements in job match grow monotonically with education.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2331.

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Length: 25 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2331

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Keywords: low wage workers; returns to tenure; sector experience; general experience; job match;

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  1. David Card & John E. DiNardo, 2002. "Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," NBER Working Papers 8769, National Bureau of Economic Research, Inc.
  2. Joseph G. Altonji & Robert A. Shakotko, 1985. "Do Wages Rise With Job Seniority?," NBER Working Papers 1616, National Bureau of Economic Research, Inc.
  3. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
  4. Brown, James N & Light, Audrey, 1992. "Interpreting Panel Data on Job Tenure," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 10(3), pages 219-57, July.
  5. Joseph G. Altonji & Nicolas Williams, 1997. "Do Wages Rise with Job Seniority? A Reassessment," NBER Working Papers 6010, National Bureau of Economic Research, Inc.
  6. Ronni Pavan, 2011. "Career Choice and Wage Growth," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 29(3), pages 549 - 587.
  7. Christian Dustmann & Costas Meghir, 2001. "Wages, experience and seniority," IFS Working Papers, Institute for Fiscal Studies W01/01, Institute for Fiscal Studies.
  8. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 75, pages 352.
  9. Gueorgui Kambourov & Iourii Manovskii, 2009. "Occupational Specificity Of Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 63-115, 02.
  10. Joseph G. Altonji & Nicolas Williams, 1992. "The Effects of Labor Market Experience, Job Seniority, and Job Mobility on Wage Growth," NBER Working Papers 4133, National Bureau of Economic Research, Inc.
  11. Card, D. & Michalopoulos, C. & Robins, P.K., 2001. "Measuring Wage Growth Among Former Welfare Recipients," Papers, Gouvernement du Canada - Human Resources Development 2001-5, Gouvernement du Canada - Human Resources Development.
  12. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
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Cited by:
  1. Connolly, Helen & Gottschalk, Peter T., 2004. "Do Earnings Subsidies Affect Job Choice?," IZA Discussion Papers 1322, Institute for the Study of Labor (IZA).
  2. Michele Bernasconi & Paola Profeta, 2007. "Redistribution or Education? The Political Economy of the Social Race," CESifo Working Paper Series 1934, CESifo Group Munich.
  3. Montserrat Vilalta-Bufi, 2008. "On the industry experience premium and labor mobility," Working Papers in Economics 208, Universitat de Barcelona. Espai de Recerca en Economia.
  4. Kenneth L. Sørensen & Rune Vejlin, 2012. "Return to Experience and Initial Wage Level: Do Low Wage Workers Catch Up?," Economics Working Papers, School of Economics and Management, University of Aarhus 2012-02, School of Economics and Management, University of Aarhus.
  5. Jennifer Brown & David A. Matsa, 2012. "Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms," NBER Working Papers 18208, National Bureau of Economic Research, Inc.
  6. Bergin, Adele, 2009. "Job Mobility in Ireland," Papers, Economic and Social Research Institute (ESRI) RB2009/2/5, Economic and Social Research Institute (ESRI).
  7. Richard Blundell & Marco Francesconi & Wilbert van der Klaauw, 2011. "Anatomy of Welfare Reform Evaluation:Announcement and Implementation Effects," Economics Discussion Papers, University of Essex, Department of Economics 698, University of Essex, Department of Economics.
  8. Bernasconi, Michele & Profeta, Paola, 2012. "Public education and redistribution when talents are mismatched," European Economic Review, Elsevier, Elsevier, vol. 56(1), pages 84-96.
  9. Kitty Stewart, 2011. "Employment trajectories and later employment outcomes for mothers in the British Household Panel Survey: an analysis by skill level," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 41396, London School of Economics and Political Science, LSE Library.
  10. Zwick, Thomas, 2009. "Why Pay Seniority Wages?," ZEW Discussion Papers 09-005, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Adele Bergin, 2008. "Job Mobility in Ireland," Economics, Finance and Accounting Department Working Paper Series, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth n1940708.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.

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