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Life-Cycle Wage Growth and Heterogeneous Human Capital

  • 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)

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.

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Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 4 (2012)
Issue (Month): 1 (07)
Pages: 399-425

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Handle: RePEc:anr:reveco:v:4:y:2012:p:399-425
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