Briefing

Career Progressions and Wage Growth: Is There a One-Size-Fits-All Job Ladder?

Abstract: Differences in earnings across workers are large and become larger as workers age. In this article, we explore the contribution of different career dynamics to the earnings gap between poorer and richer workers. We emphasize how poorer workers do not lack opportunities to change jobs, as they have high job mobility rates. Thus, they potentially could work at increasingly better-paying firms but seldom do so in practice. Indeed, despite many job changes, wages and employer quality are stagnant over the life cycle for poorer workers. We discuss this finding in light of previous economic literature and relate it to a leading framework for the labor market: the job ladder model. We conclude that postulating a common job ladder for both poorer and richer workers is not supported by the data.

Keywords: job ladder; wages; worker heterogeneity; labor market;

Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2024-05

Volume: 24

Issue: 14