Why Are Life-Cycle Earnings Profiles Getting Flatter?

RePEc Short ID: pra33
ORCID iD: 0000-0001-6991-4677

Ravikumar, B.; Vandenbroucke, Guillaume

doi:10.20955/r.2017.245-257

Journal Article

Why Are Life-Cycle Earnings Profiles Getting Flatter?

Abstract: The authors present a simple, two-period model of human capital accumulation on the job and through college attainment. They use a calibrated version of the model to explain the observed flattening of the life-cycle earnings profiles of two cohorts of workers. The model accounts for more than 55 percent of the observed flattening for high school-educated and for college-educated workers. Two channels generate the flattening in the model: selection (or higher college attainment) and a higher skill price for the more recent cohort. Absent selection, the model would have accounted for no flattening for high school-educated workers and about 23 percent of the observed flattening for college-educated workers.

JEL Classification: J31; J24; I26; E20;

https://doi.org/10.20955/r.2017.245-257