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Life-Cycle Wage Growth and Heterogeneous Human Capital

Author

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  • 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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    References listed on IDEAS

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    Cited by:

    1. López-Martín Bernabé & Takayama Naoki, 2015. "The Blighted Youth: The Impact of Recessions and Policies on Life-Cycle Unemployment," Working Papers 2015-22, Banco de México.
    2. Jorge Luis García & James J. Heckman & Duncan Ermini Leaf & María José Prados, 2017. "Quantifying the Life-cycle Benefits of a Prototypical Early Childhood Program," NBER Working Papers 23479, National Bureau of Economic Research, Inc.
    3. Fabien Postel-Vinay & Jeremy Lise, 2015. "Multidimensional Skills, Sorting, and Human Capital Accumulation," 2015 Meeting Papers 386, Society for Economic Dynamics.
    4. R. Romano & A. Tampieri, 2013. "Arts vs Engineering: The Choice among Consumption of and Investment in Education," Working Papers wp892, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. David J. Deming, 2015. "The Growing Importance of Social Skills in the Labor Market," NBER Working Papers 21473, National Bureau of Economic Research, Inc.
    6. Ammar Farooq, 2016. "The U-shape of Over-education? Human Capital Dynamics & Occupational Mobility over the Lifecycle," 2016 Papers pfa484, Job Market Papers.
    7. Pedros Silos & Eric Smith, 2015. "Human Capital Portfolios," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 635-652, July.
    8. Christopher Taber & Rune Vejlin, 2012. "Estimation of a Roy/Search/Compensating Differential Model of the Labor Market," 2012 Meeting Papers 566, Society for Economic Dynamics.
    9. Atsuko Tanaka, "undated". "Employer Loyalty, Training, and Female Labor Supply," Working Papers 2015-27, Department of Economics, University of Calgary, revised 25 Mar 2016.
    10. Paul Sullivan, "undated". "Job Tasks, Time Allocation, and Wages," Working Papers 2017-03, American University, Department of Economics.
    11. Jorge Luis García & James J. Heckman & Duncan Ermini Leaf & María José Prados, 2016. "The Life-cycle Benefits of an Influential Early Childhood Program," NBER Working Papers 22993, National Bureau of Economic Research, Inc.
    12. Jin, Xin, 2014. "The Signaling Role of Note Being Promoted: Theory and Evidence," MPRA Paper 58484, University Library of Munich, Germany.
    13. Taber, Christopher & Vejlin, Rune Majlund, 2016. "Estimation of a Roy/Search/Compensating Differential Model of the Labor Market," IZA Discussion Papers 9975, Institute for the Study of Labor (IZA).
    14. Rasmus Lentz & Nicolas Roys, 2015. "Training and Search On the Job," NBER Working Papers 21702, National Bureau of Economic Research, Inc.
    15. Chris Taber & Nicolas Roys, 2017. "Skill Prices, Occupations and Changes in the Wage Structure," 2017 Meeting Papers 208, Society for Economic Dynamics.
    16. Todd Stinebrickner & Ralph Stinebrickner & Paul Sullivan, 2017. "Job Tasks, Time Allocation, and Wages," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20176, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    17. Xin Jin, 2014. "The Signaling Role of Not Being Promoted: Theory and Evidence," Working Papers 0314, University of South Florida, Department of Economics.
    18. Pedros Silos & Eric Smith, 2015. "Human Capital Portfolios," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 635-652, July.
    19. Todd Stinebrickner & Ralph Stinebrickner & Paul Sullivan, 2017. "Beauty, Job Tasks, and Wages: A New Conclusion About Employer Taste-Based Discrimination," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20175, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    20. Stijepic, Damir, 2016. "Workplace Heterogeneity and the Returns to Versatility," Annual Conference 2016 (Augsburg): Demographic Change 145710, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    task-specific human capital; occupation; industry;

    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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