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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. 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.
  2. Jacob Mincer & Boyan Jovanovic, 1979. "Labor Mobility and Wages," NBER Working Papers 0357, National Bureau of Economic Research, Inc.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. Ashenfelter, O. & Harmon, C. & Oosterbeek, H., 1999. "A Review of Estimates of the Schooling/ Earnings Relationship, with tests for Publication Bias," Papers 99/20, College Dublin, Department of Political Economy-.
  9. 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.
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  16. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-73, October.
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  19. Gary S. Becker, 1974. "A Theory of Marriage: Part II," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 11-26 National Bureau of Economic Research, Inc.
  20. Jacob Mincer & Solomon Polachek, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 76-110 National Bureau of Economic Research, Inc.
  21. Gronau, Reuben, 1974. "Wage Comparisons-A Selectivity Bias," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1119-43, Nov.-Dec..
  22. 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.
  23. 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.
  24. B. F. Kiker & M. Mendes de Oliveira, 1992. "Optimal Allocation of Time and Estimation of Market Wage Functions," Journal of Human Resources, University of Wisconsin Press, vol. 27(3), pages 445-471.
  25. Paul Beaudry & David A. Green, 2000. "Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 907-936, November.
  26. 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.
  27. Hartog, Joop & Pfann, Gerard & Ridder, Geert, 1989. "(Non-)graduation and the earnings function : An inquiry on self-selection," European Economic Review, Elsevier, vol. 33(7), pages 1373-1395, September.
  28. 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.
  29. 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.
  30. Milton Friedman & Simon Kuznets, 1954. "Income from Independent Professional Practice," NBER Books, National Bureau of Economic Research, Inc, number frie54-1.
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  32. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  33. Robert J. Barro & Jong-Wha Lee, 1993. "Losers and Winners in Economic Growth," NBER Working Papers 4341, National Bureau of Economic Research, Inc.
  34. Polachek, Solomon William, 1975. "Differences in Expected Post-school Investments as a Determinant of Market Wage Differentials," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 451-70, June.
  35. 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.
  36. 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.
  37. 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.
  38. Kumbhakar, Subal C., 1996. "A farm-level study of labor use and efficiency wages in Indian agriculture," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 177-195.
  39. 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.
  40. 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.
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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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