Working Paper Revision

Firms as Learning Environments: Implications for Earnings Dynamics and Job Search

Abstract: This paper demonstrates that heterogeneity in firms’ promotion of human capital accumulation is an important determinant of life-cycle earnings inequality. To arrive at this finding, I develop a life-cycle search model with heterogeneous workers and firms. In the model, a worker’s earnings can grow through both human capital accumulation and labor market competition channels. Human capital growth depends on both the worker’s ability and the firm’s learning environment. I apply the model to administrative micro data from Germany. While bringing the model to the data, I find evidence of substantial variation in human capital growth across establishments that is also related to establishment characteristics designed to encourage learning. I also find that heterogeneity in firm learning environments raises life-cycle earnings growth by allowing workers to sort toward better learning opportunities, and that it accounts for roughly a quarter of the rise in cross-sectional earnings variance over the life cycle. These effects trace back to early-career matches, which contribute to persistent differences in human capital.

https://doi.org/10.20955/wp.2020.036

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2026-07

Number: 2020-036

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