Abstract
In this thesis, I analyze workers’ earnings dynamics through different angles. In the first chapter,I estimate explicit age-varying distributions of idiosyncratic persistent and transitory earnings
shocks over workers’ life-cycles using a German administrative data set. Large positive shocks,
both transitory and persistent, are characteristic for the first eight years of the working life. After
the age of 50, large negative shocks become a major source of earnings risk. Between the ages of
30 and 50, most shocks are small and transitory. Large persistent positive shocks that occur early
in the working life help to rationalize large wealth and consumption shares of the top one percent
in an incomplete markets model. In the second chapter, I estimate an earnings and job mobility
model before and after the Hartz reforms in Germany. After the Hartz reforms, full-time work fell
and part-time, marginal employment and concurrent employment rose. Wage inequality increases
at the bottom of the distribution. This comes as a result of lower full-time wages for males and
the rise of part-time work. With the empirical model I then simulate employment and earnings
trajectories and obtain lifetime values of earnings. This estimation shows that there is an increase
in the inequality of lifetime values stemming at the bottom of the distribution. Generally, both
lower wages and a larger hazard of falling and remaining in part-time employment explain the
lower lifetime earnings. However, for males, lower wages has twice the impact in the decrease of
earnings than the new employment transitions after the Hartz reforms. In the third chapter, I
study the process of human capital accumulation on the job. This has important implications
for life-cycle inequality and cross-country differences in earnings. Using a novel dataset from
Chile I document a significant gap in wage growth measured using job ad information versus the
one observed in surveys of workers. I develop a lifecycle structural model where workers face
frictional labour markets, uncertainty with respect to match quality with firms and uncertainty
about human capital accumulation on the job. I quantify how much of the gap in job ad wage
growth vs workers’ survey wage growth is due to job market frictions (time not working) versus
learning frictions. I find that failure to learn is the main reason behind the gap.
| Date of Award | 26 Nov 2020 |
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| Original language | English |
| Awarding Institution |
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| Supervisor | Helene Turon (Supervisor) & Se Kyu Choi (Supervisor) |