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Learning, Career Paths, and the Distribution of Wages

Author

Listed:
  • Santiago Caicedo
  • Robert E. Lucas Jr.
  • Esteban Rossi-Hansberg

Abstract

We develop a theory of career paths and earnings where agents organize in production hierarchies. Agents climb these hierarchies as they learn stochastically from others. Earnings grow as agents acquire knowledge and occupy positions with more subordinates. We contrast these and other implications with US census data for the period 1990 to 2010, matching the Lorenz curve of earnings and the observed mean experience-earnings profiles. We show the increase in wage inequality over this period can be rationalized with a shift in the level of the complexity and profitability of technologies relative to the distribution of knowledge in the population.

Suggested Citation

  • Santiago Caicedo & Robert E. Lucas Jr. & Esteban Rossi-Hansberg, 2019. "Learning, Career Paths, and the Distribution of Wages," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 49-88, January.
    • Handle: RePEc:aea:aejmac:v:11:y:2019:i:1:p:49-88
    Note: DOI: 10.1257/mac.20170390
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    Cited by:

    1. Bayer, Christian & Kuhn, Moritz, 2018. "Which Ladder to Climb? Decomposing Life Cycle Wage Dynamics," CEPR Discussion Papers 13158, C.E.P.R. Discussion Papers.
    2. Jaime Arellano-Bover, 2024. "Career Consequences of Firm Heterogeneity for Young Workers: First Job and Firm Size," Journal of Labor Economics, University of Chicago Press, vol. 42(2), pages 549-589.
    3. Tamkoc,Mehmet Nazim & Ventura,Gustavo, 2024. "Rules and Regulations, Managerial Time and Economic Development," Policy Research Working Paper Series 10761, The World Bank.
    4. Gillman, Max & Csabafi, Tamas Z. & Benk, Szilard & Matyas, Laszlo & Smith, Mitchell P. & Harris, Mark N., 2026. "Revisiting neoclassical growth theory: A primary role for inflation and capacity utilization," Economic Modelling, Elsevier, vol. 154(C).
    5. Robert E. Lucas Jr., 2018. "What Was the Industrial Revolution?," Journal of Human Capital, University of Chicago Press, vol. 12(2), pages 182-203.
    6. Nancy Stokey, 2020. "Technology Diffusion," Working Papers 2020-94, Becker Friedman Institute for Research In Economics.
    7. Andrea Eisfeldt & Antonio Falato & Mindy Z. Xiaolan, 2018. "The Rise of Human Capitalist," 2018 Meeting Papers 1110, Society for Economic Dynamics.
    8. Mikko Silliman & Alexander L.P. Willén, 2025. "Beyond Training: Worker Agency, Informal Learning, and Competition," CESifo Working Paper Series 12114, CESifo.
    9. Juan Ignacio Palacio-Morena & Alejandro Mungaray-Lagarda & Lizbeth Salgado-Beltrán & Jaciel Ramsés Méndez-León, 2025. "Full Competition and Innovation," Sustainability, MDPI, vol. 17(2), pages 1-22, January.
    10. Christian Bayer & Moritz Kuhn, 2018. "Which Ladder to Climb? Wages of workers by job, plant, and education," 2018 Meeting Papers 648, Society for Economic Dynamics.
    11. Dipankar Das, 2022. "A Relationship Between the Factor Indivisibility and the Output Elasticity of the Indivisible Factor," Studies in Microeconomics, , vol. 10(1), pages 82-105, June.
    12. Gregor Jarosch & Ezra Oberfield & Esteban Rossi‐Hansberg, 2021. "Learning From Coworkers," Econometrica, Econometric Society, vol. 89(2), pages 647-676, March.
    13. Nancy Stokey, 2021. "Technology and Skill: Twin Engines of Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 40, pages 12-43, April.
    14. Dalkhjav, Bayarmaa & Rubini, Loris, 2025. "Hidden information as a source of misallocation: An application to the opioid crisis," Journal of Economic Dynamics and Control, Elsevier, vol. 174(C).
    15. Nancy Stokey, 2021. "Technology Diffusion," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 42, pages 15-36, October.
    16. Andrea L. Eisfeldt & Antonio Falato & Mindy Z. Xiaolan, 2023. "Human Capitalists," NBER Macroeconomics Annual, University of Chicago Press, vol. 37(1), pages 1-61.
    17. Marek Kapicka & Ctirad Slavik, 2019. "Organization of Knowledge and Taxation," 2019 Meeting Papers 699, Society for Economic Dynamics.
    18. Jose M. Quintero-Holguin, 2018. "Wage inequality, skills and mastering new technologies," Documentos CEDE 16353, Universidad de los Andes, Facultad de Economía, CEDE.
    19. Nancy Stokey, 2020. "Technology Diffusion," NBER Working Papers 27466, National Bureau of Economic Research, Inc.
    20. Nancy L. Stokey, 2018. "Technology and Skill: Twin Engines of Growth," NBER Working Papers 24570, National Bureau of Economic Research, Inc.
    21. Gillman, Max, 2021. "Steps in industrial development through human capital deepening," Economic Modelling, Elsevier, vol. 99(C).

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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