Working Paper: NBER ID: w18602
Authors: David Lagakos; Benjamin Moll; Tommaso Porzio; Nancy Qian; Todd Schoellman
Abstract: We use international household-survey data to document that experience-wage profiles are flatter in poorer countries than in richer countries. We find a quantitatively similar pattern when we estimate returns to foreign experience by country of origin among U.S. immigrants. The most likely explanation for both findings is that workers accumulate less human capital from experience in poorer countries. Taking this into consideration in development accounting substantially increases the role of human capital in accounting for cross-country income differences.
Keywords: human capital; development accounting; income differences
JEL Codes: O11; O40; O57
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| experience-wage profiles (J31) | income levels (J31) |
| income levels (J31) | experience-wage profiles (J31) |
| higher income countries (O57) | steeper experience-wage profiles (J31) |
| poorer countries (F63) | flatter experience-wage profiles (J31) |
| foreign experience (F22) | returns to experience (Y60) |
| immigrants from rich countries (F22) | higher returns to experience (J24) |
| human capital accumulation (J24) | experience-wage profiles (J31) |