Cohort Size and the Earnings Growth of Young Workers

This paper examines the impact of cohort size on human capital investment decisions and early career earnings growth. In general, larger cohorts experience slower earnings growth and flatter earnings profiles than smaller cohorts, a finding that contradicts results reported by Welch. This implies that the negative effect of cohort size on earnings levels found in past research not only persists with age but actually increases. Also, increases in cohort size appear to depress the earnings growth of college graduates more than that of any other schooling group, again contrary to Welch's findings but consistent with evidence presented by Freeman.