NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Experience Matters: Human Capital and Development Accounting

David Lagakos, Benjamin Moll, Tommaso Porzio, Nancy Qian, Todd Schoellman

NBER Working Paper No. 18602
Issued in December 2012, Revised in October 2014
NBER Program(s):Development Economics, Economic Fluctuations and Growth, Labor Studies

We use international household-survey data to document that experience-wage profiles are flatter in poorer countries than in richer countries. We find a quantitatively similar pattern when we estimate returns to foreign experience by country of origin among U.S. immigrants. The most likely explanation for both findings is that workers accumulate less human capital from experience in poorer countries. Taking this into consideration in development accounting substantially increases the role of human capital in accounting for cross-country income differences.

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Document Object Identifier (DOI): 10.3386/w18602

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