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Human Capital and Earnings Distribution Dynamics

  • Mark Hugget
  • Gustavo Ventura
  • Amir Yaron

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9366.

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Date of creation: Dec 2002
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Publication status: published as Huggett, Mark & Ventura, Gustavo & Yaron, Amir, 2006. "Human capital and earnings distribution dynamics," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 265-290, March.
Handle: RePEc:nbr:nberwo:9366
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