Working Paper: CEPR ID: DP13158
Authors: Christian Bayer; Moritz Kuhn
Abstract: Wages grow and become more unequal as workers age. Economic theory focuses on worker investment in human capital, search for employers, and residual wage shocks to account for these life cycle wage dynamics. We highlight the importance of jobs: collections of tasks and duties defined by employers within the production process. We provide empirical evidence that climbing the career ladder toward jobs characterized by more responsibility, complexity, and autonomy accounts for the largest part of life cycle wage dynamics. It accounts for 50% of average wage growth, 50% of rising differences between gender, and virtually all of rising dispersion within gender over the life cycle.
Keywords: human capital; lifecycle wage growth; wage inequality; careers
JEL Codes: D33; E24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| climbing the career ladder (J62) | wage growth (J31) |
| job characteristics (M54) | wage dynamics (J31) |
| gender wage gap by age (J31) | rising career gap (J62) |
| human capital investments (J24) | wage growth (J31) |
| job levels (J62) | wage differences (J31) |