Heterogeneity and wage inequalities over the life cycle

Thierry Magnac (1) , Sébastien Roux (2)

1 TSE-R - Toulouse School of Economics
2 CREST - Centre de Recherche en Économie et Statistique

Using data on French male wage workers observed over 30 years, we estimate by random and fixed effect methods a wage equation with pervasive heterogeneity. Individual wage profiles are derived from a human capital investment model and described by a level, a slope and a curvature. Among others, our empirical application delivers original results on issues like the Mincer dip, and the time-varying correlations between wage growth and levels, or between initial wages and growth. Static and long-run inequality indices can easily be compared and decomposed into their multidimensional components.

Mots clés: Human capital investment; Inequality; Wage dynamics; Post-schooling; Wage growth; Random and fixed effects

Domaines: Economies et finances

Thierry Magnac, Sébastien Roux. Heterogeneity and wage inequalities over the life cycle. European Economic Review, 2021, 134, pp.103715. ⟨10.1016/j.euroecorev.2021.103715⟩. ⟨hal-04532017⟩