Sources of Wage Growth

Jerome Adda and Christian Dustmann

No 15154, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the sources of wage growth over the life cycle, where individuals have the possibility to acquire vocational training at the start of their career. Wage growth is determined by sectoral and firm mobility, unobserved ability and the accumulation of human capital. Workers may move between two occupational sectors that require cognitive-abstract (CA) and routine-manual (RM) skills, and job mobility is induced by non-pecuniary job attributes and persistent firm-worker productivity matches. Estimating this model using longitudinal administrative data over three decades, we show that RM skills are a key driver of early wage growth while CA skills become important later on. Moreover, job amenities are an important determinant of mobility decisions. Vocational training has long term effects on career outcomes, affecting the type and quality of matches, with substantial internal rates of return both to the individual as well as society.

Keywords: learning by doing; wage determination; apprenticeship training; job mobility (search for similar items in EconPapers)
JEL-codes: J2 J3 J6 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2022-03
New Economics Papers: this item is included in nep-dge, nep-eur and nep-lab
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Citations: View citations in EconPapers (1)

Published - published in: Journal of Political Economy , 2023, 131 (2), 456 - 503

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Journal Article: Sources of Wage Growth (2023)
Working Paper: Sources of Wage Growth (2022)
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