Experience Matters: Human Capital and Development Accounting

70 Pages Posted: 7 Dec 2012 Last revised: 6 Aug 2014

See all articles by David Lagakos

David Lagakos

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Benjamin Moll

Princeton University - Department of Economics

Tommaso Porzio

Yale University

Nancy Qian

Yale University - Department of Economics

Todd Schoellman

Federal Reserve Banks - Federal Reserve Bank of Minneapolis

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Date Written: December 2012

Abstract

We use international household-survey data to document that experience-wage profiles are flatter in poorer countries than in richer countries. We find a quantitatively similar pattern when we estimate returns to foreign experience by country of origin among U.S. immigrants. The most likely explanation for both findings is that workers accumulate less human capital from experience in poorer countries. Taking this into consideration in development accounting substantially increases the role of human capital in accounting for cross-country income differences.

Suggested Citation

Lagakos, David and Moll, Benjamin and Porzio, Tommaso and Qian, Nancy and Schoellman, Todd, Experience Matters: Human Capital and Development Accounting (December 2012). NBER Working Paper No. w18602, Available at SSRN: https://ssrn.com/abstract=2186330

David Lagakos (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Benjamin Moll

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
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Tommaso Porzio

Yale University ( email )

New Haven, CT 06520
United States

Nancy Qian

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

Todd Schoellman

Federal Reserve Banks - Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

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