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Learning, Career Paths, and the Distribution of Wages

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  • Santiago Caicedo
  • Robert E. Lucas, Jr.
  • Esteban Rossi-Hansberg

Abstract

We develop a theory of career paths and earnings in an economy in which agents organize in production hierarchies. Agents climb these organizational hierarchies as they learn stochastically from other individuals. Earnings grow over time as agents acquire knowledge and occupy positions with larger numbers of subordinates. We contrast these and other implications of the theory with U.S. census data for the period 1990 to 2010. The model matches well the Lorenz curve of earnings as well as the observed mean experience-earnings profiles. We show that the increase in wage inequality over this period can be rationalized with a shift in the distribution of the complexity and profitability of technologies relative to the distribution of knowledge in the population.

Suggested Citation

  • Santiago Caicedo & Robert E. Lucas, Jr. & Esteban Rossi-Hansberg, 2016. "Learning, Career Paths, and the Distribution of Wages," NBER Working Papers 22151, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22151
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    References listed on IDEAS

    as
    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    2. Robert E. Lucas Jr. & Benjamin Moll, 2014. "Knowledge Growth and the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 1-51.
    3. Lorenzo Caliendo & Ferdinando Monte & Esteban Rossi-Hansberg, 2015. "The Anatomy of French Production Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 809-852.
    4. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    5. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
    6. Luis Garicano & Esteban Rossi-Hansberg, 2006. "Organization and Inequality in a Knowledge Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1383-1435.
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    Citations

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    Cited by:

    1. Andrea Eisfeldt & Antonio Falato & Mindy Z. Xiaolan, 2018. "The Rise of Human Capitalist," 2018 Meeting Papers 1110, Society for Economic Dynamics.
    2. Robert E. Lucas Jr., 2018. "What Was the Industrial Revolution?," Journal of Human Capital, University of Chicago Press, vol. 12(2), pages 182-203.
    3. Nancy Stokey, 2020. "Technology Diffusion," Working Papers 2020-94, Becker Friedman Institute for Research In Economics.
    4. Nancy L. Stokey, 2018. "Technology and Skill: Twin Engines of Growth," NBER Working Papers 24570, National Bureau of Economic Research, Inc.
    5. Christian Bayer & Moritz Kuhn, 2018. "Which Ladder to Climb? Wages of workers by job, plant, and education," 2018 Meeting Papers 648, Society for Economic Dynamics.
    6. Christian Bayer & Moritz Kuhn, 2018. "Which Ladder to Climb? Decomposing Life Cycle Wage Dynamics," CESifo Working Paper Series 7236, CESifo.
    7. Nancy Stokey, . "Technology and Skill: Twin Engines of Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    8. Jose M. Quintero-Holguin, 2018. "Wage inequality, skills and mastering new technologies," Documentos CEDE 016353, Universidad de los Andes - CEDE.
    9. Gregor Jarosch & Esteban Rossi-Hansberg & Ezra Oberfield, 2018. "Learning from Coworkers," 2018 Meeting Papers 838, Society for Economic Dynamics.
    10. Arellano-Bover, Jaime, 2020. "Career Consequences of Firm Heterogeneity for Young Workers: First Job and Firm Size," IZA Discussion Papers 12969, Institute of Labor Economics (IZA).
    11. Nancy Stokey, . "Technology Diffusion," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    12. Nancy Stokey, 2020. "Technology Diffusion," NBER Working Papers 27466, National Bureau of Economic Research, Inc.
    13. Christian Bayer & Moritz Kuhn, 2018. "Which Ladder to Climb? Decomposing Life Cycle Wage Dynamics," CESifo Working Paper Series 7236, CESifo.

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    More about this item

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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