Working Paper: CEPR ID: DP17564
Authors: Jerome Adda; Christian Dustmann
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
JEL Codes: J31; J62; J63; I26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| vocational training (M53) | wage growth (J31) |
| vocational training (M53) | cognitive-abstract skills (C60) |
| cognitive-abstract skills (C60) | wage growth (J31) |
| routine-manual skills (L23) | wage growth (J31) |
| job amenities (J28) | mobility decisions (J62) |
| job-to-job mobility (J62) | wage growth (J31) |