Sources of Wage Growth

Adda, Jérôme and Christian Dustmann

No 17564, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper investigates the sources of wage growth over the life cycle, where individuals have the possibility to acquire vocational training at the start of their career. Wage growth is determined by sectoral and firm mobility, unobserved ability and the accumulation of human capital. Workers may move between two occupational sectors that require cognitive-abstract (CA) and routine-manual (RM) skills, and job mobility is induced by non-pecuniary job attributes and persistent firm-worker productivity matches. Estimating this model using longitudinal administrative data over three decades, we show that RM skills are a key driver of early wage growth while CA skills become important later on. Moreover, job amenities are an important determinant of mobility decisions. Vocational training has long term effects on career outcomes, affecting the type and quality of matches, with substantial internal rates of return both to the individual as well as society.

Keywords: Wage determination; Learning by doing; Job mobility; Apprenticeship training (search for similar items in EconPapers)
JEL-codes: I26 J31 J62 J63 (search for similar items in EconPapers)
Date: 2022-10
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Related works:
Journal Article: Sources of Wage Growth (2023)
Working Paper: Sources of Wage Growth (2022)
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