Life-Cycle Wage Growth and Firm Productivity in Developed and Developing Economics

Kerstin Holzheu () and Juan Munoz-Morales
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Kerstin Holzheu: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics

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Abstract: Life-cycle wage growth varies significantly across countries. We examine the role of the local distribution of firm productivity in shaping life-cycle wages by introducing a random search model that disentangles the effects of firm productivity distribution, on-the-job learning, and labor market frictions. Estimates of the model for Brazil, Colombia, and the United States suggest that the shape and scale of the firm-type distribution are key factors in explaining life-cycle wage growth. Counterfactual simulations suggest that equating the firm-type distribution in Brazil and Colombia to that of the United States would substantially reduce the cross-country gap in workers' life cycle wage trajectories.

Keywords: Developing countries; Income profiles; Labour markets (search for similar items in EconPapers)
Date: 2025-08-12
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-05030546v2
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Working Paper: Life-Cycle Wage Growth and Firm Productivity in Developed and Developing Economics (2025)
Working Paper: Life-Cycle Wage Growth and Firm Productivity in Developed and Developing Economics (2025)
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