The Price of Experience

We identify a key role of factor supply, driven by demographic changes, in shaping several empirical regularities that are a focus of active research in macro and labor economics. In particular, the large movements of the return to experience over the last four decades are almost perfectly explained by demographic changes alone, with no role attributable to demand shifts. Moreover, these demographic changes account for the differential dynamics of the age premium across education groups emphasized by Katz and Murphy (1992), and the differential dynamics of the college premium across age groups emphasized by Card and Lemieux (2001).

Keywords: Experience Premium, Return to Experience, Wage Dispersion, Consistent

JEL Classification: E24, E25, J24, J31

Suggested Citation: Suggested Citation

Jeong, Hyeok and Kim, Yong and Manovskii, Iourii, The Price of Experience (December 13, 2012). KDI School of Pub Policy & Management Paper No. 12-09, Available at SSRN: https://ssrn.com/abstract=2188807 or http://dx.doi.org/10.2139/ssrn.2188807

Hyeok Jeong (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)
+82-2-880-2921 (Phone)
+82-2-879-1496 (Fax)

Yong Kim

Yonsei University ( email )

Seoul
Korea, Republic of (South Korea)

Iourii Manovskii

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-6880 (Phone)
215-573-2057 (Fax)

HOME PAGE: http://www.econ.upenn.edu/~manovski/