A Feasible Equilibrium Search Model of Individual Wage Dynamics with Experience Accumulation

We present a tractable equilibrium job search model of individual worker careers allowing for human capital accumulation, employer heterogeneity and individual-level shocks. We estimate our structural model on a panel of Danish matched employer-employee data and use it to analyze the determinants of wage dispersion and individual wage dynamics. Our main motivation for doing this is to quantify the respective roles of human capital accumulation coming along with work experience and the forces of labor market competition activated by workers' job search behavior in shaping individual labor earnings dynamics over the life cycle. We shall pay particular attention to the definition of differences between the returns to work experience as opposed to the returns to tenure at a particular firm