Estimating Occupation- and Location-Specific Wages over the Life Cycle

Elias Ilin and Ellyn Terry
Working Paper 2021-15a
June 2021 (Revised August 2021)

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Abstract: In this paper we develop a novel method to project location-specific life-cycle wages for all occupations listed in the Occupational Outlook Handbook from the U.S. Bureau of Labor Statistics. Our method consists of two steps. In the first step, we use individual-level data from the Current Population Survey to estimate the average number of years of potential labor market experience that is associated with each percentile of the education-level specific wage distribution. In the second step, we map this estimated average years of experience to the wage-level percentiles reported in the Occupational Employment and Wage Statistics data for each occupation and area. Finally, we develop a model capable of projecting the trajectory of wages across all possible years of experience for each occupation.

JEL classification: J31

Key words: wage growth, wages, experience, education, earnings, Mincer earnings function

https://doi.org/10.29338/wp2021-15a


The authors thank David Altig, Melinda Pitts, John Robertson, Alex Ruder, and Jon Willis. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content Elias Ilin, Federal Reserve Bank of Atlanta and Boston University, or Ellyn Terry, Federal Reserve Bank of Atlanta and the University of Washington.

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