Wage Progression Among Less Skilled Workers

Abstract

Despite the large amount of work in labor economics devoted towards wage progress we know surprisingly little about the mechanics of wage growth, particularly among low skilled workers. This paper takes a step in this direction by examining wage progression between and among moderate to low skilled workers. We nd that once true labor market experience is taken into account appropriately, there are not large di erences in earnings growth between low skilled workers and medium skilled workers despite the substantial di erence in wage levels. In particular the return to experience for high school dropouts is almost exactly the same as the return for high school graduates. This return also does not differ across individuals from di erent family backgrounds. However, we do nd di erences In the last thirty years we have witnessed a large increase in the \\returns to skill. " These changes in the wage structure have renewed interest in increasing the skill levels of low skill workers. Attempts to do this through job training programs have been largely unsuccessful as the wage gains from these programs tend to be quite modest (although the costs are

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