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Job Ladders, Human Capital, and Wage Inequality over Time

Author

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  • Lance Lochner

    (University of Western Ontario)

  • Burhanettin Kuruscu

    (University of Texas - Austin)

Abstract

Based on our estimates (in progress), we plan to analyze how and why the following have changed over time and across cohorts: (i) overall and within-group wage inequality, (ii) lifecycle wage growth, (iii) job promotion rates, (iv) implied on-the-job investment. We are particularly interested in the role played by the baby boom vs. technological change. We will also explore the extent to which our framework can help explain the productivity slowdown as a potential response to the baby boom. Estimates from our model with multiple job types can be compared against those for a model with a single job (maintaining Ben-Porath style investment behavior) as in Hugget, Ventura and Yaron (2006) to determine the importance of allowing for imperfect substitutability across workers in different jobs. We also discuss policies to foster human capital investment, especially for workers in low paying (i.e. low cost) jobs.

Suggested Citation

  • Lance Lochner & Burhanettin Kuruscu, 2009. "Job Ladders, Human Capital, and Wage Inequality over Time," 2009 Meeting Papers 678, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:678
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    References listed on IDEAS

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    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    2. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 705-746.
    3. Huggett, Mark & Ventura, Gustavo & Yaron, Amir, 2006. "Human capital and earnings distribution dynamics," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 265-290, March.
    4. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 65-97, October.
    5. Richard B. Freeman, 1979. "The Effect of Demographic Factors on Age-Earnings Profiles," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 289-318.
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