Accounting for changing returns to experience

Lutz Hendricks

No 558, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: Returns to experience for U.S. workers have changed over the post-war period. This paper argues that a simple model goes a long way towards replicating these changes. The model features three well-known ingredients: (i) an aggregate production function with constant skill-biased technical change; (ii) cohort qualities that vary with average years of schooling; and crucially (iii) time-invariant ageefficiency profiles. The model quantitatively accounts for changes in longitudinal and cross-sectional returns to experience, as well as the differential evolution of the college wage premium for young and old workers.

Keywords: Returns to experience; College wage premium (search for similar items in EconPapers)
JEL-codes: E24 I26 J31 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:558

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