MEASURING HUMAN CAPITAL AND ITS EFFECTS ON WAGE GROWTH

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Abstract

Abstract Ever since Mincer, years of labour market experience were used to approximate individual's general human capital, while years of seniority were used to approximate job-specific human capital. This specification is restrictive because it assumes that starting wages at a new job depend only on job market experience. In this paper, I investigate the effects of human capital on wage growth by using a more flexible specification of the wage equation, which allows for a rich set of information on past employment spells to affect the starting wages. In addition, I endogenize the labour mobility decision. In order to illuminate the effects of human capital accumulation patterns on wage growth, I compare counterfactual career paths for representative individuals.

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