Wage Growth Decomposition: Mobility, Learning and Loss of Human Capital in Unemployment • Job Talk

Speaker
Tanya Baron
Date
28/12/2015 - 12:30 - 11:00Add To Calendar 2015-12-28 11:00:00 2015-12-28 12:30:00 Wage Growth Decomposition: Mobility, Learning and Loss of Human Capital in Unemployment • Job Talk I develop and calibrate a job search model of individual career dynamics with learning-by-doing at work and loss of skills in unemployment. The model assumes ex ante identical workers who stochastically move across several stages of their career. Cumulative wage growth is driven by human capital dynamics and job search. Workers' mobility decisions depend on changing offer arrival rates, human capital returns, and planning horizons. Firms post stage-specific offers taking workers’ stage-specific search strategies into account. In the calibrated model, the range of equilibrium offers is broad initially, contracts in mid-career, and shifts downward in the last career stage. Mobility accounts for almost 60 percent of total wage growth among high school graduates during the first decade of a career and declines subsequently; among college graduates, mobility can even become a negative factor when they begin to search within a lower range of wage offers. The paper highlights the important role that the wage offer distributions play in wage growth analysis. It proposes a tractable stationary framework with rich life-cycle properties. The model features permanent wage scarring due to human capital loss, and implies that high school graduates lose up to almost 7 percent of their potential lifetime wage gain due to the depreciation of skills and foregone skill accumulation during unemployment. Building 504, Room 011 אוניברסיטת בר-אילן - Department of Economics Economics.Dept@mail.biu.ac.il Asia/Jerusalem public
Place
Building 504, Room 011
Affiliation
Tel Aviv University
Abstract

I develop and calibrate a job search model of individual career dynamics with learning-by-doing at work and loss of skills in unemployment. The model assumes ex ante identical workers who stochastically move across several stages of their career. Cumulative wage growth is driven by human capital dynamics and job search. Workers' mobility decisions depend on changing offer arrival rates, human capital returns, and planning horizons. Firms post stage-specific offers taking workers’ stage-specific search strategies into account. In the calibrated model, the range of equilibrium offers is broad initially, contracts in mid-career, and shifts downward in the last career stage. Mobility accounts for almost 60 percent of total wage growth among high school graduates during the first decade of a career and declines subsequently; among college graduates, mobility can even become a negative factor when they begin to search within a lower range of wage offers. The paper highlights the important role that the wage offer distributions play in wage growth analysis. It proposes a tractable stationary framework with rich life-cycle properties. The model features permanent wage scarring due to human capital loss, and implies that high school graduates lose up to almost 7 percent of their potential lifetime wage gain due to the depreciation of skills and foregone skill accumulation during unemployment.

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Last Updated Date : 15/12/2015