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The Changing Pattern of Wage Growth for Low Skilled Workers.

October 2005

Eric French, Federal Reserve Bank of Chicago; Bhashkar Mazumder, Federal Reserve Bank of Chicago; Christopher Taber, Department of Economics and Institute for Policy Research, Northwestern University.

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One of the fundamental facts in labor economics is that, on average, wages tend to rise rapidly early in a worker's career. Since wage growth during the early stages of the lifecycle provides a potential pathway out of poverty, it is important to understand what causes this wage progression and how it is affected by changes in the overall economy. In this chapter, we focus on the key components that determine an individual's early career wage growth and how these factors have changed for less skilled workers over the last twenty years. In particular, we examine the relative importance of accumulating work experience as compared to the quality of job matches in influencing wage growth over this time period.

Employment, Unemployment, and the Labor Market, Young Adults and the Transition to Adulthood