IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i6p561-575.html
   My bibliography  Save this article

The effect of schooling, experiences, and firm size on earnings in Sri Lanka (Incorporated with the major emphasis of Mincer’s Earnings Function)

Author

Listed:
  • W.A. Senathissa

    (Senior Lecturer, Department of Economics and Statistics, Sabaragamuwa University of Sri Lanka)

Abstract

This paper attempts to identify the effect of education, experiences and firm size on earnings in Sri Lanka incorporated with empirical emphasis of the Mincer’s Earning Function. Since distinguished findings are reported pertaining to the log earning profile of education and experiences in literature, this study attempts to investigate, which kind of log earning profile is associated with education and experiences in Sri Lanka by adding a new variable “Firm Size†to the conventional Mincer’s earning function. For this purpose, direct personal interviews with structured questionnaire survey were conducted to collect cross sectional data from 115 employees who are employing at firms in different sizes in Maspotha Divisional Secretariat Division of Kurunegala District. OLS Multiple regression analysis and Curvilinear regression techniques were employed as the major data analysis tools of the study. Results revealed by the study show that log-earning is a linear function of education (R2=34.5%) and a quadratic function of experiences (R2= 35.8%). Rate of returns to education (7.4%) was higher than the rate of returns to experiences (2.7%) which implies that the log-earning profile in the area is education oriented. Medium scale enterprises (20.1%) were identified as the most influential firm type on earnings. Overall, it shows that the firm size has a positive effect on earnings in the area. Homogeneous preferences on education stimulated by the provision of free education were identified as the reason for linearity of education while deterioration of skills with declining physical and mental effort with growing age were reasons for the concavity behaviour of experiences. Further investment on education, taking wage policies of firms into consideration and forecasting future expectation of firms in the job market will lead to increase rate of return on the investment of education and experiences.

Suggested Citation

  • W.A. Senathissa, 2023. "The effect of schooling, experiences, and firm size on earnings in Sri Lanka (Incorporated with the major emphasis of Mincer’s Earnings Function)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 561-575, June.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:6:p:561-575
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-6/561-575.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/journals/ijriss/articles/the-effect-of-schooling-experiences-and-firm-size-on-earnings-in-sri-lanka-incorporated-with-the-major-emphasis-of-mincers-earnings-function/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dunn, L F, 1986. "Work Disutility and Compensating Differentials: Estimation of Factors in the Link between Wages and Firm Size," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 67-73, February.
    2. Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-710, November.
    3. Harry Anthony Patrinos, 2016. "Estimating the return to schooling using the Mincer equation," IZA World of Labor, Institute of Labor Economics (IZA), pages 278-278, July.
    4. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 35-78.
    5. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    6. Mincer, Jacob, 1997. "The Production of Human Capital and the Life Cycle of Earnings: Variations on a Theme," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 26-47, January.
    7. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-125, March.
    8. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
    9. Strand, Jon, 1987. "The Relationship between Wages and Firm Size: An Information Theoretic Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 51-68, February.
    10. George J. Stigler, 1962. "Information in the Labor Market," NBER Chapters, in: Investment in Human Beings, pages 94-105, National Bureau of Economic Research, Inc.
    11. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    12. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    13. Peter Rupert & Mark E. Schweitzer & Eric K. Severance-Lossin & Erin Turner, 1996. "Earnings, education and experience," Economic Review, Federal Reserve Bank of Cleveland, issue Q IV, pages 2-12.
    14. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    15. Joseph E. Stiglitz, 1986. "The Wage-Productivity Hypothesis: Its Economic Consequences and Policy Implications," NBER Working Papers 1976, National Bureau of Economic Research, Inc.
    16. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, May.
    17. repec:fth:prinin:335 is not listed on IDEAS
    18. Jin Huem Park, 1994. "Returns to Schooling: A Peculiar Deviation from Linearity," Working Papers 714, Princeton University, Department of Economics, Industrial Relations Section..
    19. Jin Huem Park, 1994. "Returns to Schooling: A Peculiar Deviation from Linearity," Working Papers 714, Princeton University, Department of Economics, Industrial Relations Section..
    20. Weiss, Andrew W, 1980. "Job Queues and Layoffs in Labor Markets with Flexible Wages," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 526-538, June.
    21. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, May.
    22. Freeman, Richard B & Medoff, James L, 1981. "The Impact of the Percentage Organized on Union and Nonunion Wages," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 561-572, November.
    23. Paul E. Gabriel & Susanne Schmitz, 2005. "A note on occupational variations in the returns to education in the US labor market," International Journal of Manpower, Emerald Group Publishing Limited, vol. 26(5), pages 450-456, July.
    24. Heckman, James & Layne-Farrar, Anne & Todd, Petra, 1996. "Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on Earnings," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 562-610, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Kyle Glenn, 2021. "Social Labor vs Human Capital: Competing Theories of Skills," Working Papers 2115, New School for Social Research, Department of Economics.
    3. Meghir, Costas & Rivkin, Steven, 2011. "Econometric Methods for Research in Education," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 3, chapter 1, pages 1-87, Elsevier.
    4. Krzysztof Kalisiak & Małgorzata Szreder & Kaja Białowąs, 2011. "Finansowy i niefinansowy zwrot z edukacji," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 9, pages 77-102.
    5. Moura, Rodrigo Leandro, 2008. "Testando as Hipóteses do Modelo de Mincer para o Brasil," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 62(4), December.
    6. Das, Tirthatanmoy & Polachek, Solomon, 2017. "Micro Foundations of Earnings Differences," IZA Discussion Papers 10922, Institute of Labor Economics (IZA).
    7. Norbert R. Schady, 2003. "Convexity and Sheepskin Effects in the Human Capital Earnings Function: Recent Evidence for Filipino Men," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(2), pages 171-196, May.
    8. Hans-Peter Y. Qvist & Anders Holm & Martin D. Munk, 2016. "Demand and Supply Effects and Returns to College Education - Evidence from a Natural Experiment with Engineers in Denmark," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20164, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    9. Yasser Razak Hussain & Pranab Mukhopadhyay, 2023. "How Much do Education, Experience, and Social Networks Impact Earnings in India? A Panel Data Analysis Disaggregated by Class, Gender, Caste and Religion," SAGE Open, , vol. 13(4), pages 21582440231, December.
    10. Balestra, Simone & Backes-Gellner, Uschi, 2017. "Heterogeneous returns to education over the wage distribution: Who profits the most?," Labour Economics, Elsevier, vol. 44(C), pages 89-105.
    11. Huggett, Mark & Ventura, Gustavo & Yaron, Amir, 2006. "Human capital and earnings distribution dynamics," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 265-290, March.
    12. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    13. Farah Hani & Miguel Angel Santos, 2021. "Diagnosing Human Capital as a Binding Constraint to Growth: Tests, Symptoms and Prescriptions," CID Working Papers 144a, Center for International Development at Harvard University.
    14. Gustavo Yamada, 2007. "Retornos a la educación superior en el mercado laboral: ¿vale la pena el esfuerzo?," Diagnóstico y propuesta, Consorcio de Investigación Económica y Social.
    15. Eric A. Hanushek & Jens Ruhose & Ludger Woessmann, 2017. "Knowledge Capital and Aggregate Income Differences: Development Accounting for US States," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 184-224, October.
    16. Mikael Lindahl & Alan B. Krueger, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December.
    17. Ganna Vakhitova & Christopher R. Bollinger, 2011. "Labor Market Return to Computer Skills: Using Microsoft Certification to Measure Computer Skills," Discussion Papers 46, Kyiv School of Economics.
    18. David Card & Thomas Lemieux, 2001. "Dropout and Enrollment Trends in the Postwar Period: What Went Wrong in the 1970s?," NBER Chapters, in: Risky Behavior among Youths: An Economic Analysis, pages 439-482, National Bureau of Economic Research, Inc.
    19. Adhitya, Dhian & Samudro, Bhimo Rizky, 2019. "The Role of Cognitive and Non-Cognitive Skills on Labour Market Outcomes in Indonesia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(1), pages 3-16.
    20. Deniz Ozabaci & Daniel Henderson, 2015. "Additive kernel estimates of returns to schooling," Empirical Economics, Springer, vol. 48(1), pages 227-251, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:6:p:561-575. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://www.rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.