Life-Cycle Wage Growth and Heterogeneous Human Capital

Posted: 1 Sep 2012

See all articles by Carl Sanders

Carl Sanders

Washington University in St. Louis

Christopher Taber

National Bureau of Economic Research (NBER); University of Wisconsin - Madison

Date Written: July 2012

Abstract

Wages grow rapidly for young workers, and the human capital investment model is the classic framework to explain this growth. While estimation and the theory of human capital have traditionally focused on general human capital, both have evolved toward models of heterogeneous human capital. In this article, we review and evaluate the current state of this literature. We exposit the classic model of general human capital investment and extend it to show how a model of heterogeneous human capital can nest previous models. We then summarize the empirical literature on firm-specific human capital, industry- and occupation-specific human capital, and task-specific human capital and discuss how these concepts can explain a wide variety of labor market phenomena that traditional models cannot.

Suggested Citation

Sanders, Carl and Taber, Christopher R., Life-Cycle Wage Growth and Heterogeneous Human Capital (July 2012). Annual Review of Economics, Vol. 4, pp. 399-425, 2012, Available at SSRN: https://ssrn.com/abstract=2139261 or http://dx.doi.org/10.1146/annurev-economics-080511-111011

Carl Sanders

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Christopher R. Taber

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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