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Experience Matters: Human Capital and Development Accounting

  • David Lagakos
  • Benjamin Moll
  • Tommaso Porzio
  • Nancy Qian
  • Todd Schoellman

We use international household-survey data to document that experience-wage profiles are flatter in poorer countries than in richer countries. We find a quantitatively similar pattern when we estimate returns to foreign experience by country of origin among U.S. immigrants. The most likely explanation for both findings is that workers accumulate less human capital from experience in poorer countries. Taking this into consideration in development accounting substantially increases the role of human capital in accounting for cross-country income differences.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18602.

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Date of creation: Dec 2012
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Handle: RePEc:nbr:nberwo:18602
Note: DEV EFG LS
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