The Life Cycle of Earnings and Educational Attainment of U.S. Cohorts

Guillaume Vandenbroucke, B Ravikumar and Yu-Chien Kong ()

No 775, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: We document that age profiles of labor earnings for college- and high-school-educated workers are flatter for recent cohorts than for older cohorts. Workers who were 20-year old in 1940 saw their annual earnings increase four-fold over the course of their working lives. For workers who were 20-year old in 1970 the increase was 2-fold. We propose a parsimonious model of schooling and human capital accumulation on the job to account for this phenomenon. In our model a workers' ability is key for the accumulation of human capital in school and on the job. Workers with higher ability are more likely to attend college, and have steeper earning profiles. In this model the flattening results from the changing composition of workers: when the fraction of college-educated workers increases for a particular generation, the average ability of both college- and high-school-educated workers decreases. Thus, average earnings profiles flatten. We calibrate the model to fit some moments characterizing the earnings of the 1940 generation at different age. There is only one exogenous variable: the rental rate of human capital that increases through time. Our model accounts for 40% of the observed flattening of high-school earnings, and 73% for college earnings.

Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed014:775

Access Statistics for this paper

More papers in 2014 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().