The Evolution of U.S. Wages: Skill Prices versus Human Capital

Lutz Hendricks
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Lutz Hendricks: UNC Chapel Hill

No 320, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: The objective of this paper is to decompose movements in U.S. wages into movements of skill prices and labor qualities. The idea is to interpret the age-wage profiles of various birth cohorts observed in CPS data through the lens of human capital theory. Theory predicts that age-efficiency profiles should be concave (absent large skill price changes) and vary systematically with cohort education. I develop a model of school choice and on-the-job training and calibrate it to post-war U.S. wage data. The model measures the initial endowments (at age 17) and age-human capital profiles of each birth cohort as well as the school-specific skill prices for each year.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:320

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