Wage inequality widens substantially over the life cycle. We decompose this widening into worker and firm heterogeneity in returns to experience and dynamic sorting. We extend the AKM model to allow wage growth to differ across workers and firms, and develop a two-way clustering algorithm. Using matched employer-employee data from Italy, we document substantial heterogeneity in both worker and firm growth components. Worker growth accounts for two-thirds of the rise in life-cycle wage inequality, while firm growth accounts for the remaining third. Workers with more accumulated skills increasingly sort into high-paying firms over the life cycle.