Heterogeneity and Wage Inequalities over the Life Cycle

Thierry Magnac and Sébastien Roux ()

No 15083, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using data on French male wage employees observed over 30 years, we estimate individual-specific parameters of a human capital investment model by random and fixed effect methods. Individual wage profiles are described by a level, a slope and a curvature. Among the salient results, cross-section inequalities exceed life-cycle inequalities by a factor increasing from 20% to 80%, and permanent heterogeneity explains between 60 and 90% of the variance of wages. Multidimensional heterogeneity, and in particular the heterogeneous curvature of individual profiles, is found to be necessary to properly describe the stochastic process of wages over the life-cycle.

Keywords: Human capital investment; Inequality; Wage dynamics; Post-schooling wage growth; Random and fixed effects (search for similar items in EconPapers)
JEL-codes: C33 D91 I24 J24 J31 (search for similar items in EconPapers)
Date: 2020-07
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Related works:
Journal Article: Heterogeneity and wage inequalities over the life cycle (2021)
Working Paper: Heterogeneity and wage inequalities over the life cycle (2021)
Working Paper: Heterogeneity and Wage Inequalities over the Life Cycle (2021)
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