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Human capital and earnings distribution dynamics

  • Huggett, Mark
  • Ventura, Gustavo
  • Yaron, Amir

Mean earnings and measures of earnings dispersion and skewness all increase in US data over most of the working life-cycle for a typical cohort as the cohort ages. We show that a benchmark human capital model can replicate these properties from the right distribution of initial human capital and learning ability. These distributions have the property that learning ability must differ across agents and that learning ability and initial human capital are positively correlated.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 53 (2006)
Issue (Month): 2 (March)
Pages: 265-290

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Handle: RePEc:eee:moneco:v:53:y:2006:i:2:p:265-290
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