We derive wage equations with individual specic coe¢ cients from a structural model of human capital investments over the life-cycle. This model allows for interruptions in labor market participation, and addresses missing data and attrition issues. We further control for selection in a exible way by using interactive e¤ects. Estimation is based on long administrative panel data of male wages in the private sector in France. A structural function approach shows that interruptions negatively a¤ect average wages. More surprisingly, they also negatively a¤ect the inter-decile range of wages after twenty years, and this is due to interruptions being endogeneous. These results question the popular Missing At Random assumption that is made when assessing the building up of wage inequalities over the life cycle.
Human capital investment; wage inequalities; factor models; missing data;
- 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
Laurent Gobillon, Thierry Magnac et Sébastien Roux, « Lifecycle Wages and Human Capital Investments: Selection and Missing Data », TSE Working Paper, n° 22-1299, février 2022.
TSE Working Paper, n° 22-1299, février 2022