Experience vs. Obsolescence: A Vintage-Human-Capital Model

Matthias Kredler

MPRA Paper from University Library of Munich, Germany

Abstract: I combine an infinite-horizon version of Ben-Porath’s (1967) model of human-capital accumulation with a vintage structure as in Chari & Hopenhayn (1991). Different skill levelsinside a vintage are complementary in production. Vintage-specific human capital is accumulated based on workers’ optimal strategies and is lost when the technology is phased out by an endogenous firm decision. I establish equivalence between competitive equilibrium and a planner’s problem. It is shown that returns to skill are highest in young vintages. Accelerated technological change shortens the life cycle of a technology and speeds up obsolescence; the premium on tenure rises because more workers are concentrated in young technologies with high skill premia. A calibration exercise comparing two steady states shows that the model quantitatively accounts for the changes in the experience premium, earnings dispersion and earnings turbulence in German data.

Keywords: Vintage human capital; age-earnings profiles; partial differential equations (search for similar items in EconPapers)
JEL-codes: C63 E24 J01 (search for similar items in EconPapers)
Date: 2008-07-28
New Economics Papers: this item is included in nep-bec, nep-dge, nep-hrm, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://mpra.ub.uni-muenchen.de/10200/1/MPRA_paper_10200.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/18933/2/MPRA_paper_18933.pdf revised version (application/pdf)

Related works:
Journal Article: Experience vs. obsolescence: A vintage-human-capital model (2014)
Working Paper: Experience vs. Obsolescence: A Vintage-Human-Capital Model (2010)
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