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Life-Cycle Wage Growth and Heterogeneous Human Capital

Author

Listed:
  • Carl Sanders

    (Department of Economics, Washington University in Saint Louis, Saint Louis, Missouri 63130)

  • Christopher Taber

    ( Department of Economics, University of Wisconsin-Madison, Madison, Wisconsin 53706)

Abstract

Wages grow rapidly for young workers, and the human capital investment model is the classic framework to explain this growth. While estimation and the theory of human capital have traditionally focused on general human capital, both have evolved toward models of heterogeneous human capital. In this article, we review and evaluate the current state of this literature. We exposit the classic model of general human capital investment and extend it to show how a model of heterogeneous human capital can nest previous models. We then summarize the empirical literature on firm-specific human capital, industry- and occupation-specific human capital, and task-specific human capital and discuss how these concepts can explain a wide variety of labor market phenomena that traditional models cannot.

Suggested Citation

  • Carl Sanders & Christopher Taber, 2012. "Life-Cycle Wage Growth and Heterogeneous Human Capital," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 399-425, July.
    • Handle: RePEc:anr:reveco:v:4:y:2012:p:399-425
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    More about this item

    Keywords

    task-specific human capital; occupation; industry;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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