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

Kerstin Holzheu () and Muñoz-Morales, Juan ()
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Kerstin Holzheu: Sciences Po, Paris
Muñoz-Morales, Juan: IÉSEG School of Management
Authors registered in the RePEc Author Service: Juan Munoz-Morales

No 18970, IZA Discussion Papers from IZA Network @ LISER

Abstract: Life-cycle wage growth varies substantially across countries. We examine the role of the firm productivity distribution by introducing a random-search model that disentangles firm heterogeneity, on-the-job learning, and labor-market frictions. Estimates for Brazil, Colombia, and the United States reveal two distinct disadvantages: a long left tail of low-paying firms in Brazil and a highly compressed firm ladder in Colombia. Counterfactuals show that equating each country's firm distribution to that of the United States closes most of the cross-country gap in life-cycle wage growth: Brazil's wage growth rises from 73 to 103 percent of the U.S. value, and Colombia's from 52 to 115 percent. These results are robust to alternative distributional assumptions, education residualization, and external discipline on the productivity tail.

Keywords: labor markets; income profiles; developing countries (search for similar items in EconPapers)
JEL-codes: E24 J24 J31 J63 J64 O11 O12 O15 (search for similar items in EconPapers)
Date: 2026-09
New Economics Papers: this item is included in nep-bec and nep-lam
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Related works:
Working Paper: Life-Cycle Wage Growth and Firm Productivity in Developed and Developing Economics (2026)
Working Paper: Life-Cycle Wage Growth and Firm Productivity in Developed and Developing Economics (2026)
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