Cohort Effects on Earnings Profiles: Evidence from Sweden

Abstract

The cohort crowding literature suggests that the size of one’s generation, or cohort, has repercussions on the level and shape of one’s earnings profile. We estimate cohort size effects on earnings profiles and further assess whether these profiles are affected by the individuals. position in the Baby Boom. Using a rich individual based panel data set, we follow the Swedish Baby Boomers of the 1940's and the following Baby Bust of the 1950's from 1968 to 1999. Our results indicate that there are significant cohort effects on the earnings profile which are fairly consistent across gender but not across education levels. Large cohorts have a higher overall earnings level than small cohorts. Cohorts born in an upswing of a boom have a higher earnings level than cohorts born in a downswing. The effects on return to experience vary across education and experience levels.Earnings profiles; Baby Boom; Cohort size; Panel data