Accounting for changing returns to experience

Hendricks Lutz ()
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Hendricks Lutz: University of North Carolina, Chapel Hill, Chapel Hill, NC, USA

The B.E. Journal of Macroeconomics, 2018, vol. 18, issue 1, 18

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 age-efficiency 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: 2018
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DOI: 10.1515/bejm-2015-0201

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