Heterogeneity and Wage Inequalities over the Life Cycle

Magnac, Thierry and Roux, Sébastien (2019) Heterogeneity and Wage Inequalities over the Life Cycle. TSE Working Paper, n. 19-1041, Toulouse

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Using panel data from a single cohort of French male wage earners observed over a long span of 30 years starting at their entry in the labor market, we estimate parameters of a human capital investment model by random and fixed effect methods. Individual wage proles are described by their individual-specific level, slope and curvature. This allows a fine decomposition of the variance of (log-)wages at different times of the life-cycle and in the long run. Among salient results, short run time-varying inequalities are shown to be larger that long run inequality by a factor of 20% to 80%. Individual permanent heterogeneity explain between 60 to 90% of the variance of wages. Single dimensional heterogeneity
explains well those variances at a point in time but not over the whole period or in the long run. Multidimensional heterogeneity is needed and in particular under the form of a horizon individual effect.

Item Type: Monograph (Working Paper)
Language: English
Date: October 2019
Place of Publication: Toulouse
JEL Classification: C33 - Models with Panel Data
D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 10 Oct 2019 08:54
Last Modified: 10 Oct 2019 08:54
["eprint_fieldname_oai_identifier" not defined]: oai:tse-fr.eu:123621
URI: http://publications.ut-capitole.fr/id/eprint/32833

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