Experience vs. Obsolescence: A Vintage-Human-Capital Model
AbstractI combine an infinite-horizon version of Ben-Porath’s (1967) model of human-capital accumulation with a vintage structure as in Chari & Hopenhayn (1991). Different skill levelsinside a vintage are complementary in production. Vintage-specific human capital is accumulated based on workers’ optimal strategies and is lost when the technology is phased out by an endogenous firm decision. I establish equivalence between competitive equilibrium and a planner’s problem. It is shown that returns to skill are highest in young vintages. Accelerated technological change shortens the life cycle of a technology and speeds up obsolescence; the premium on tenure rises because more workers are concentrated in young technologies with high skill premia. A calibration exercise comparing two steady states shows that the model quantitatively accounts for the changes in the experience premium, earnings dispersion and earnings turbulence in German data.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10200.
Date of creation: 28 Jul 2008
Date of revision:
Vintage human capital; age-earnings profiles; partial differential equations;
Other versions of this item:
- Matthias Kredler, 2010. "Experience vs. Obsolescence: A Vintage-Human-Capital Model," 2010 Meeting Papers 369, Society for Economic Dynamics.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-BEC-2008-08-31 (Business Economics)
- NEP-DGE-2008-08-31 (Dynamic General Equilibrium)
- NEP-HRM-2008-08-31 (Human Capital & Human Resource Management)
- NEP-LAB-2008-08-31 (Labour Economics)
- NEP-MAC-2008-08-31 (Macroeconomics)
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