Dual Returns to Experience

Laura Hospido, Jose Garcia-Louzao and Alessandro Ruggier ()
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Alessandro Ruggier: University of Nottingham

No 102, Bank of Lithuania Working Paper Series from Bank of Lithuania

Abstract: In this paper we study how labor market duality affects human capital accumulation and wage trajectories of young workers. Using rich administrative data for Spain, we follow workers since their entry into the labor market to measure experience accumulated under different contractual arrangements and we estimate their wage returns. We document lower returns to experience accumulated in fixed-term contracts compared to permanent contracts and show that this difference is not due to unobserved firm heterogeneity or match quality. Instead, we provide evidence that the gap in returns is due to lower human capital accumulation while working under fixed-term contracts. This difference widens with worker ability, in line with skill-learning complementarity. Our results suggest that the widespread use of fixedterm work arrangements reduces skill acquisition of high-skilled workers, holding back life-cycle wage growth by up to 16 percentage points after 15 years since labor market entry.

Keywords: labor market duality; human capital; earnings dynamics (search for similar items in EconPapers)
JEL-codes: J30 J41 J63 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2022-02-15
New Economics Papers: this item is included in nep-cta, nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Dual returns to experience (2023)
Working Paper: Dual returns to experience (2022)
Working Paper: Dual Returns to Experience (2022)
Working Paper: Dual Returns to Experience (2021)
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