Sources of Wage Growth

Abstract

This paper investigates the sources of wage growth over the life cycle, determined by sectoral and firm mobility, unobserved ability, the accumulation of cognitive-abstract or routine-manual skills, and whether workers enroll in vocational training at the start of their career. Our analysis uses longitudinal administrative data over three decades and shows that routine-manual skills drive early wage growth, while cognitive-abstract skills become more important later. Moreover, job amenities are an important determinant of mobility decisions. Vocational training has long-term effects on career outcomes through various channels and generates returns for both the individual and society. © 2023 The University of Chicago. All rights reserved. Published by The University of Chicago Press.

Keywords

Author Keywords

Not provided

Index Keywords

Employment Vocational education wage cognition

Author Affiliations

Università Bocconi, Milan, Italy

University College London, London, United Kingdom

Funding & Acknowledgements

European Research Council, ERC

We thank Jim Heckman, Courtney Brell, David Zentler-Munro, four anonymous referees, and participants in seminars at many universities and conferences for helpful comments and discussion. We are particularly grateful to Costas Meghir and Jean-Marc Robin for their input into an early version of this paper (Adda et al. 2006). Dustmann acknowledges funding by the European Research Council (ERC) advanced grant MCLPS 833861, the NORFACE (New Opportunities for Research Funding Agency Cooperation in Europe) welfare program, and the Deutsche Forschungsgemeinschaft (DFG) grant 1024/1-2 AOBJ:642097. Replication files are available in a zip file. This paper was edited by James Heckman.

Horizon 2020 Framework Programme, H2020

Grant: 833861

We thank Jim Heckman, Courtney Brell, David Zentler-Munro, four anonymous referees, and participants in seminars at many universities and conferences for helpful comments and discussion. We are particularly grateful to Costas Meghir and Jean-Marc Robin for their input into an early version of this paper (Adda et al. 2006). Dustmann acknowledges funding by the European Research Council (ERC) advanced grant MCLPS 833861, the NORFACE (New Opportunities for Research Funding Agency Cooperation in Europe) welfare program, and the Deutsche Forschungsgemeinschaft (DFG) grant 1024/1-2 AOBJ:642097. Replication files are available in a zip file. This paper was edited by James Heckman.

Deutsche Forschungsgemeinschaft, DFG

Grant: 1024/1-2 AOBJ:642097

We thank Jim Heckman, Courtney Brell, David Zentler-Munro, four anonymous referees, and participants in seminars at many universities and conferences for helpful comments and discussion. We are particularly grateful to Costas Meghir and Jean-Marc Robin for their input into an early version of this paper (Adda et al. 2006). Dustmann acknowledges funding by the European Research Council (ERC) advanced grant MCLPS 833861, the NORFACE (New Opportunities for Research Funding Agency Cooperation in Europe) welfare program, and the Deutsche Forschungsgemeinschaft (DFG) grant 1024/1-2 AOBJ:642097. Replication files are available in a zip file. This paper was edited by James Heckman.

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Sources of Wage Growth

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