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Differences in Wage Growth by Education Level: Do Less-Educated Workers Gain Less from Work Experience?

Author

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  • Connolly, Helen

    () (Luxembourg Income Study)

  • Gottschalk, Peter T.

    () (Boston College)

Abstract

This paper revisits the old question of whether wage growth differs by education level. Do more educated workers invest more than less educated workers in firm specific, sector specific or general human capital? Do they gain more from improved job match? The paper makes both a methodological and a substantive contribution by offering an alternative strategy for separately identifying returns to general experience, sector specific experience, firm tenure, and job match. Our empirical results, based on the Survey of Income and Program Participation, show that overall wage growth is higher for more-educated workers. This reflects higher returns to general experience for college graduates and higher returns to sector experience for high school graduates. Improvements in job match grow monotonically with education.

Suggested Citation

  • Connolly, Helen & Gottschalk, Peter T., 2006. "Differences in Wage Growth by Education Level: Do Less-Educated Workers Gain Less from Work Experience?," IZA Discussion Papers 2331, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp2331
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    References listed on IDEAS

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    1. Gueorgui Kambourov & Iourii Manovskii, 2009. "Occupational Specificity Of Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 63-115, February.
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    9. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    10. Joseph G. Altonji & Nicolas Williams, 1992. "The Effects of Labor Market Experience, Job Seniority, and Job Mobility on Wage Growth," NBER Working Papers 4133, National Bureau of Economic Research, Inc.
    11. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352-352.
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    Cited by:

    1. Vilalta-Bufi, Montserrat, 2010. "On the industry experience premium and labor mobility," Labour Economics, Elsevier, vol. 17(3), pages 547-555, June.
    2. Bernasconi, Michele & Profeta, Paola, 2012. "Public education and redistribution when talents are mismatched," European Economic Review, Elsevier, vol. 56(1), pages 84-96.
    3. Stewart, Kitty, 2011. "Employment trajectories and later employment outcomes for mothers in the British Household Panel Survey: an analysis by skill level," LSE Research Online Documents on Economics 41396, London School of Economics and Political Science, LSE Library.
    4. Blundell, Richard & Francesconi, Marco & van der Klaauw, Wilbert, 2011. "Anatomy of Welfare Reform Evaluation: Announcement and Implementation Effects," IZA Discussion Papers 6050, Institute for the Study of Labor (IZA).
    5. Bergin, Adele, 2009. "Job Mobility in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 15-47.
    6. Kenneth L. Sørensen & Rune Vejlin, 2014. "Return To Experience And Initial Wage Level: Do Low Wage Workers Catch Up?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(6), pages 984-1006, September.
    7. Connolly, Helen & Gottschalk, Peter T., 2004. "Do Earnings Subsidies Affect Job Choice?," IZA Discussion Papers 1322, Institute for the Study of Labor (IZA).
    8. Zwick, Thomas, 2009. "Why Pay Seniority Wages?," ZEW Discussion Papers 09-005, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Michele Bernasconi & Paola Profeta, 2007. "Redistribution or Education? The Political Economy of the Social Race," CESifo Working Paper Series 1934, CESifo Group Munich.
    10. Mazzutti, Caio Cícero Toledo Piza da Costa, 2016. "Three essays on the causal impacts of child labour laws in Brazil," Economics PhD Theses 0616, Department of Economics, University of Sussex.
    11. Titan Alon, 2018. "Earning More by Doing Less: Human Capital Specialization and the College Wage Premium," 2018 Meeting Papers 497, Society for Economic Dynamics.
    12. Jennifer Brown & David A. Matsa, 2012. "Boarding a Sinking Ship? An Investigation of Job Applications to Distressed Firms," NBER Working Papers 18208, National Bureau of Economic Research, Inc.
    13. Andini, Corrado, 2009. "How Fast Do Wages Adjust to Human-Capital Productivity? Dynamic Panel-Data Evidence from Belgium, Denmark and Finland," IZA Discussion Papers 4583, Institute for the Study of Labor (IZA).
    14. Adsera, Alicia & Menendez, Alicia, 2009. "Fertility Changes in Latin America in the Context of Economic Uncertainty," IZA Discussion Papers 4019, Institute for the Study of Labor (IZA).
    15. Piza, Caio & Souza, André Portela Fernandes de, 2016. "Short and long-term effects of a child-labor ban," Textos para discussão 428, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    16. Kitty Stewart, 2011. "Employment trajectories and later employment outcomes for mothers in the British Household Panel Survey: An analysis by skill level," CASE Papers case144, Centre for Analysis of Social Exclusion, LSE.

    More about this item

    Keywords

    low wage workers; returns to tenure; sector experience; general experience; job match;

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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