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Learning, Career Paths, and the Distribution of Wages

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  • Rossi-Hansberg, Esteban
  • Caicedo Soler, Santiago
  • Lucas, Robert

Abstract

We develop a theory of career paths and earnings in an economy in which agents organize in production hierarchies. Agents climb these organizational hierarchies as they learn stochastically from other individuals. Earnings grow over time as agents acquire knowledge and occupy positions with larger numbers of subordinates. We contrast these and other implications of the theory with U.S. census data for the period 1990 to 2010. The model matches well the Lorenz curve of earnings as well as the observed mean experience-earnings profiles. We show that the increase in wage inequality over this period can be rationalized with a shift in the distribution of the complexity and profitability of technologies relative to the distribution of knowledge in the population.

Suggested Citation

  • Rossi-Hansberg, Esteban & Caicedo Soler, Santiago & Lucas, Robert, 2016. "Learning, Career Paths, and the Distribution of Wages," CEPR Discussion Papers 11213, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11213
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    1. Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
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    3. Robert E. Lucas Jr. & Benjamin Moll, 2014. "Knowledge Growth and the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 1-51.
    4. Lorenzo Caliendo & Ferdinando Monte & Esteban Rossi-Hansberg, 2015. "The Anatomy of French Production Hierarchies," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 809-852.
    5. Jovanovic, Boyan & Rousseau, Peter L., 2005. "General Purpose Technologies," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224, Elsevier.
    6. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 12, pages 1043-1171, Elsevier.
    7. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
    8. Luis Garicano & Esteban Rossi-Hansberg, 2006. "Organization and Inequality in a Knowledge Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1383-1435.
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    Cited by:

    1. Andrea L. Eisfeldt & Antonio Falato & Mindy Z. Xiaolan, 2023. "Human Capitalists," NBER Macroeconomics Annual, University of Chicago Press, vol. 37(1), pages 1-61.
    2. Andrea Eisfeldt & Antonio Falato & Mindy Z. Xiaolan, 2018. "The Rise of Human Capitalist," 2018 Meeting Papers 1110, Society for Economic Dynamics.
    3. Robert E. Lucas Jr., 2018. "What Was the Industrial Revolution?," Journal of Human Capital, University of Chicago Press, vol. 12(2), pages 182-203.
    4. Nancy Stokey, 2021. "Technology and Skill: Twin Engines of Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 40, pages 12-43, April.
    5. Gregor Jarosch & Ezra Oberfield & Esteban Rossi‐Hansberg, 2021. "Learning From Coworkers," Econometrica, Econometric Society, vol. 89(2), pages 647-676, March.
    6. Jose M. Quintero-Holguin, 2018. "Wage inequality, skills and mastering new technologies," Documentos CEDE 16353, Universidad de los Andes, Facultad de Economía, CEDE.
    7. Jaime Arellano-Bover, 2024. "Career Consequences of Firm Heterogeneity for Young Workers: First Job and Firm Size," Journal of Labor Economics, University of Chicago Press, vol. 42(2), pages 549-589.
    8. Nancy Stokey, 2020. "Technology Diffusion," Working Papers 2020-94, Becker Friedman Institute for Research In Economics.
    9. Dipankar Das, 2022. "A Relationship Between the Factor Indivisibility and the Output Elasticity of the Indivisible Factor," Studies in Microeconomics, , vol. 10(1), pages 82-105, June.
    10. Marek Kapicka & Ctirad Slavik, 2019. "Organization of Knowledge and Taxation," 2019 Meeting Papers 699, Society for Economic Dynamics.
    11. Nancy L. Stokey, 2018. "Technology and Skill: Twin Engines of Growth," NBER Working Papers 24570, National Bureau of Economic Research, Inc.
    12. Christian Bayer & Moritz Kuhn, 2018. "Which Ladder to Climb? Wages of workers by job, plant, and education," 2018 Meeting Papers 648, Society for Economic Dynamics.
    13. Nancy Stokey, 2021. "Technology Diffusion," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 42, pages 15-36, October.
    14. Nancy Stokey, 2020. "Technology Diffusion," NBER Working Papers 27466, National Bureau of Economic Research, Inc.
    15. Bayer, Christian & Kuhn, Moritz, 2018. "Which Ladder to Climb? Decomposing Life Cycle Wage Dynamics," CEPR Discussion Papers 13158, C.E.P.R. Discussion Papers.
    16. Gillman, Max, 2021. "Steps in industrial development through human capital deepening," Economic Modelling, Elsevier, vol. 99(C).

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    More about this item

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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