Abstract
We derive wage equations with individual-specific coefficients from a structural model of human capital investment over the life-cycle. This model allows for interruptions in labour market participation and deals with missing data and attrition problems. We propose a new framework that deals with missingness at random and is based on factor decompositions that allow for flexible control of selection. Our approach leads to an interactive effect wage specification, which we estimate using long administrative panel data on male wages in the private sector in France. A structural function approach shows that interruptions negatively affect average wages. Interestingly, they also negatively affect the inter-decile range of wages after twenty years. This is only partly due to the fact that interruptions are endogenous.
Keywords
Human capital investment; wage inequalities; factor models; missing data;
JEL codes
- C38: Classification Methods • Cluster Analysis • Principal Components • Factor Models
- D91: Intertemporal Household Choice • Life Cycle Models and Saving
- I24: Education and Inequality
- J24: Human Capital • Skills • Occupational Choice • Labor Productivity
- J31: Wage Level and Structure • Wage Differentials
Replaces
Laurent Gobillon, Thierry Magnac, and Sébastien Roux, “Lifecycle Wages and Human Capital Investments: Selection and Missing Data”, TSE Working Paper, n. 22-1299, February 2022.
Reference
Laurent Gobillon, Thierry Magnac, and Sébastien Roux, “Lifecycle Wages and Human Capital Investments: Selection and Missing Data”, The Review of Economic Studies, vol. 93, n. 5, October 2026, pp. 3173–3208.
See also
Published in
The Review of Economic Studies, vol. 93, n. 5, October 2026, pp. 3173–3208