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Experience Matters: Human Capital and Development Accounting

Author

Listed:
  • David Lagakos

    (Arizona State University)

  • Benjamin Moll

    (Princeton University)

  • Tommaso Porzio

    (Yale University)

  • Nancy Qian

    (Yale University, NBER, CEPR, BREAD)

Abstract

Using recently available large-sample micro data from 36 countries, we document that experience-earnings profiles are flatter in poor countries than in rich countries. Motivated by this fact, we conduct a development accounting exercise that allows the returns to experience to vary across countries but is otherwise standard. When the country-specific returns to experience are interpreted in such a development accounting framework - and are therefore accounted for as part of human capital - we find that human and physical capital differences can account for almost two thirds of the variation in cross-country income differences, as compared to less than half in previous studies.

Suggested Citation

  • David Lagakos & Benjamin Moll & Tommaso Porzio & Nancy Qian, 2012. "Experience Matters: Human Capital and Development Accounting," Working Papers 2012-021, Human Capital and Economic Opportunity Working Group.
  • Handle: RePEc:hka:wpaper:2012-021
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    More about this item

    Keywords

    Human Capital; Experience-Earnings Profiles; Development Accounting;
    All these keywords.

    JEL classification:

    • 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
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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