- March 2014
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- I study a vintage-human-capital model in which long-lived workers accumulate human capital following an exogenous learning curve. Different skill levels inside a vintage are complementary in production; this makes the ex ante homogeneous workers enter different vintages. The continuous-time framework allows me to study the timing decision for the technology phase-out differentially and to derive sharp characterization for wages and the distribution of workers in the dying technology. I show how to posit and solve a planner's problem and construct equilibrium in this way. Consistent with empirical evidence, I show that the experience premium is always positive but diminishes as a technology ages. The connection between workers' learning curves and the technology's progress curve is characterized. (C) 2014 Elsevier B.V. All rights reserved.
- vintage human capital; tenure-wage profiles; learning curve; infinite-dimensional state space; lagrange-multiplier theorem; technological-progress; economic growth; accumulation; replacement; investment; equipment; lifetime; adoption; firms; model