Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339195 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 148
Publisher: 
Università Cattolica del Sacro Cuore, Dipartimento di Economia e Finanza (DISCE), Milano
Abstract: 
We study how worker-specific ability to generate earnings evolves over the life cycle. We measure the dynamics of earning ability by extending the canonical AKM model of wage determination to allow worker effects to vary as individuals age. Age-dependent estimates of earning ability unveil heterogeneous career trajectories, with high ability workers sorting into higher-paying employers early in their careers and moving to different firms to a lesser extent thereafter. We show that earning ability significantly decreases after job loss, suggesting that it is at least partly match-specific. This result is particularly pronounced for high-ability workers, who, conversely, are the ones experiencing the lowest penalties in employer pay after job loss.
Subjects: 
Earning ability
AKM model
ageing
JEL: 
J31
J21
Document Type: 
Working Paper

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