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Why Are Life-Cycle Earnings Profiles Getting Flatter?

B Ravikumar and Guillaume Vandenbroucke ()

Review, 2017, vol. 99, issue 3, 245-57

Abstract: The authors present a simple, two-period model of human capital accumulation on the job and through college attainment. They use a calibrated version of the model to explain the observed flattening of the life-cycle earnings profiles of two cohorts of workers. The model accounts for more than 55 percent of the observed flattening for high school-educated and for college-educated workers. Two channels generate the flattening in the model: selection (or higher college attainment) and a higher skill price for the more recent cohort. Absent selection, the model would have accounted for no flattening for high school-educated workers and about 23 percent of the observed flattening for college-educated workers.

JEL-codes: E20 I26 J24 J31 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.20955/r.2017.245-257

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