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Mincer's Overtaking Point and the Lifecycle Earnings Distribution

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  • Polachek, Solomon

    ()
    (Binghamton University, New York)

Abstract

In 1958 Jacob Mincer pioneered an important approach to understand earnings distribution. In the years since Mincer’s seminal work, he as well as his students and colleagues extended the original human capital model, reaching important conclusions about a whole array of observations pertaining to human wellbeing. This line of research explained why education enhances earnings; why earnings rise at a diminishing rate throughout one’s life; why earnings growth is smaller for those anticipating intermittent labor force participation; why men earn more than women; why whites earn more than blacks; why occupational distributions differ by gender; why geographic and job mobility predominate among the young; why unemployment is lower among the skilled; and why numerous other labor market phenomena occur. This paper surveys the answers to these and other questions based on research emanating from Mincer’s original discovery. In addition, this paper provides new empirical evidence regarding Mincer’s concept of the “overtaking age” – a topic not currently well explored in the literature. In this latter vein, the paper shows that Mincer’s original finding of a U-shaped (log) variance of earnings over the life cycle is upheld in recent data, both for the U.S. as well as at least seven other countries.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 865.

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Length: 48 pages
Date of creation: Aug 2003
Date of revision:
Publication status: published in: Review of Economics of the Household, 2003, 1 (4), 273-304
Handle: RePEc:iza:izadps:dp865

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Keywords: overtaking age; earnings; human capital; wellbeing; Mincer;

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References

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  1. Kao, Charng & Polachek, Solomon W & Wunnava, Phanindra V, 1994. "Male-Female Wage Differentials in Taiwan: A Human Capital Approach," Economic Development and Cultural Change, University of Chicago Press, vol. 42(2), pages 351-74, January.
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  9. Chiswick, Carmel U., 1986. "The efficiency-wage hypothesis : Applying a general model of the interaction between labor quantity and quality," Journal of Development Economics, Elsevier, vol. 20(2), pages 311-323, March.
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  12. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-73, October.
  13. Grossbard-Shechtman, Shoshana Amyra, 1984. "A Theory of Allocation of Time in Markets for Labour and Marriage," Economic Journal, Royal Economic Society, vol. 94(376), pages 863-82, December.
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  16. Paul Beaudry & David Green, 1997. "Cohort Patterns in Canadian Earnings: Assessing the Role of Skill Premia in Inequality Trends," NBER Working Papers 6132, National Bureau of Economic Research, Inc.
  17. Robst, John & VanGilder, Jennifer, 2000. "Atrophy rates in male and female occupations," Economics Letters, Elsevier, vol. 69(3), pages 407-413, December.
  18. Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2002. "Inferring Program Effects for Special Populations: Does Special Education Raise Achievement for Students with Disabilities?," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 584-599, November.
  19. Yoram Weiss, 1981. "Expected Interruptions in Labor Force Participation and Sex Related Differences in Earnings Growth," NBER Working Papers 0667, National Bureau of Economic Research, Inc.
  20. Michael, Robert T, 1973. "Education in Nonmarket Production," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 306-27, Part I, M.
  21. Goldin, Claudia & Polachek, Solomon, 1987. "Residual Differences by Sex: Perspectives on the Gender Gap in Earnings," American Economic Review, American Economic Association, vol. 77(2), pages 143-51, May.
  22. Polachek, Solomon W. & Robst, John, 1998. "Employee labor market information: comparing direct world of work measures of workers' knowledge to stochastic frontier estimates," Labour Economics, Elsevier, vol. 5(2), pages 231-242, June.
  23. Becker, Gary S, 1974. "A Theory of Marriage: Part II," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S11-S26, Part II, .
  24. Polachek, Solomon W & Yoon, Bong Joon, 1996. "Panel Estimates of a Two-Tiered Earnings Frontier," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(2), pages 169-78, March-Apr.
  25. Polachek, Solomon William, 1981. "Occupational Self-Selection: A Human Capital Approach to Sex Differences in Occupational Structure," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 60-69, February.
  26. Gronau, Reuben, 1974. "Wage Comparisons-A Selectivity Bias," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1119-43, Nov.-Dec..
  27. Nakosteen, Robert A & Zimmer, Michael A, 2001. "Spouse Selection and Earnings: Evidence of Marital Sorting," Economic Inquiry, Western Economic Association International, vol. 39(2), pages 201-13, April.
  28. Polachek, Solomon W, 1995. "Earnings over the Life Cycle: What Do Human Capital Models Explain?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(3), pages 267-89, August.
  29. Polachek, Solomon W. & Kim, Moon-Kak, 1994. "Panel estimates of the gender earnings gap : Individual-specific intercept and individual-specific slope models," Journal of Econometrics, Elsevier, vol. 61(1), pages 23-42, March.
  30. Robert J. Barro & Jong-Wha Lee, 1993. "Losers and Winners in Economic Growth," NBER Working Papers 4341, National Bureau of Economic Research, Inc.
  31. Polachek, Solomon W & Yoon, Bong Joon, 1987. "A Two-tiered Earnings Frontier Estimation of Employer and Employee Information in the Labor Market," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 296-302, May.
  32. Marjorie L. Baldwin & Lester A. Zeager & Paul R. Flacco, 1994. "Gender Differences in Wage Losses from Impairments: Estimates from the Survey of Income and Program Participation," Journal of Human Resources, University of Wisconsin Press, vol. 29(3), pages 865-887.
  33. Jacob Mincer & Boyan Jovanovic, 1982. "Labor Mobility and Wages," NBER Working Papers 0357, National Bureau of Economic Research, Inc.
  34. Jacob Mincer & Haim Ofek, 1982. "Interrupted Work Careers: Depreciation and Restoration of Human Capital," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 3-24.
  35. David Autor, 2000. "Wiring the Labor Market," NBER Working Papers 7959, National Bureau of Economic Research, Inc.
  36. Moon-Kak Kim & Solomon W. Polachek, 1994. "Panel Estimates of Male-Female Earnings Functions," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 406-428.
  37. Paglin, Morton & Rufolo, Anthony M, 1990. "Heterogeneous Human Capital, Occupational Choice, and Male-Female Earnings Differences," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 123-44, January.
  38. Light, Audrey & Ureta, Manuelita, 1995. "Early-Career Work Experience and Gender Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 121-54, January.
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Cited by:
  1. Petra Marotzke, 2014. "Job Search and the Age-Inequality Profile," Working Paper Series of the Department of Economics, University of Konstanz 2014-06, Department of Economics, University of Konstanz.

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