Earnings Over the Lifecycle The Mincer Earnings Function and Its Applications Solomon W. Polachek

1st April 2008
now publishers Inc
120 pages: 234 x 156 x 6mm
Foundations and Trends in Microeconomics


While there have been a number of surveys on the Mincer earnings function, they focus heavily on econometric issues. While covering a number of econometric issues, Earnings over the Lifecycle: The Mincer Earnings Function and Its Applications focuses on the underlying economics behind the Mincer earnings function and its robustness and relevance to policy applications. Topics include verifying the consistently observed cross-sectional concavity and corroborating implications regarding earnings distribution particularly at the "overtaking" level of experience, across many countries and demographic groups. Among the policy relevant applications are how to use Mincer's theories to estimate discrimination, particularly race and gender differences in both earnings and occupational distributions. In addition, this book shows how the earnings function can be adapted to measure incomplete information in labor markets, an extension which is important in measuring the competitiveness of particular labor markets. The final part of Earnings over the Lifecycle: The Mincer Earnings Function and Its Applications explores incentive based compensation schemes.Some argue that such contract models complement human capital in explaining wages and other labor market phenomena; others argue that contract models substitute for the human capital model.The book concludes that one has to consider both types of models simultaneously in a unified framework to determine the relative merits of each.

1 Introduction: Why Study Earnings Functions? 2 The Theoretical Underpinnings: The Ben-Porath Model Lifecycle Model of Human Capital Investment over the Lifecycle. 3 The Mincer Earnings Function. 4 Derivation of the Mincer Earnings Function. 5 Direct Applications of the Mincer Earnings Function. 6 Econometric Issues Regarding Estimation of the Mincer Earnings Function. 7 Extending the Human Capital Model. 8 The Power of the Mincer Earnings Function in Explaining the Earnings Distribution. 9 Critiques of the Human Capital Approach. 10 Conclusion. References

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