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Modelling the average income dependence on work experience

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Ivan O. Kitov

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Abstract

The average and median income dependence on work experience and time is analyzed and modeled for the USA. The original data set providing the mean and median income estimates in 10 year long intervals spans a long time period of almost 35 years ? from 1967 to 2003. A microeconomic model linking personal income, population age structure and GDP per capita is used to predict the mean income values in various age groups and their relative evolution in time. Also modeled is the value of work experience where the mean income growth ends and it starts to drop exponentially with increasing age. This work experience increases through time as the square root of the per capita GDP growth. Prediction for the following 20 years is given for each age group considering potential per capita growth rate of 1.6%. The USA mean income dependence on work experience for 1987 coincides with that for 2002 in the UK ? the years when per capita GDP were equal in the countries.

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File URL: http://arxiv.org/abs/0811.0489
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Publisher Info
Paper provided by arXiv.org in its series Quantitative Finance Papers with number 0811.0489.

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Date of creation: Nov 2008
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Handle: RePEc:arx:papers:0811.0489

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References listed on IDEAS
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  1. Ivan O. Kitov, 2005. "Modelling the overall personal income distribution in the USA from 1994 to 2002," Working Papers 07, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
  2. Ivan O. Kitov, 2005. "Evolution of the personal income distribution in the USA: High incomes," Working Papers 02, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
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  3. Ivan O. Kitov, 2005. "A model for microeconomic and macroeconomic development," Working Papers 05, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
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This page was last updated on 2009-12-21.


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