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Title: Demographic Change and the Return to Experience

Citation Type: Miscellaneous

Publication Year: 2008

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Abstract: We propose and estimate a model in which changes in the demographic compositionof the labor force may affect the returns to labor market experience. We consider workersas providing two distinct productive services physical effort, or labor, and services ofthe skill accumulated with labor market experience, or experience. The key element inthe model is the aggregate production function that allows for complementarity betweenthe appropriately measured aggregate stocks of labor and experience. The parametersof the aggregate technology are identified by estimating individual earnings equationsthat consistently aggregate. Both time-series and cross-sectional data confirm strongexperience-labor complementarity. We find that the observed demographic changes thatdrive the aggregate experience to labor ratio account nearly perfectly for the substantialchanges in the experience premium over time.

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Authors: Manovskii, Iourii; Kim, Yong; Jeong, Hyeok

Publisher: University of Pennsylvania

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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