Wages, hours and human capital over the life cycle

Abstract

We investigate wage-hours contracts within a four-period rent sharing
model that incorporates asymmetric information. Distinctions are made
among (a) an investment period, (b) a period in which the parties may
separate (quits or layoffs) or continue rent accumulation and sharing,
(c) a post investment period and, (d) retirement. We establish that
increases in both wage rates and hours of work in the post-investment
period serve to minimise sub-optimal separations and, moreover that
both wage and hours schedules are concave. Testing is based on 13 waves
of British Household Panel Survey from 1991 to 2003.