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The Effect of Demographic Factors on Age-Earnings Profiles

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Richard B. Freeman

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Abstract

The age-earnings profile of male workers is significantly influenced by the age composition of the workforce. When the number of young workers increased sharply in the 1970s, the profile "twisted" against them, apparently because younger and older male workers are imperfect substitutes in production. The effect is especially marked among college graduates. By contrast, the age-earnings profile of female workers appears to be little influenced by the age composition of the female workforce, possibly because the intermittent work experience of women makes younger and older women closer substitutes in production. The dependence of the age-earnings profile on demographically induced movements along a relative demand schedule suggests that standard human capital models of the profile, which posit that earnings rise with age and experience solely as a result of individual investment behavior, are incomplete.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0316.

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Date of creation: Jan 1980
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Handle: RePEc:nbr:nberwo:0316

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  1. Nancy D. Ruggles & Richard Ruggles, 1977. "The Anatomy of Earnings Behavior," NBER Chapters, in: Distribution of Economic Well-Being, pages 115-162 National Bureau of Economic Research, Inc. [Downloadable!]
  2. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November. [Downloadable!] (restricted)
  3. Johnson, William R, 1980. "Vintage Effects in the Earnings of White American Men," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 399-407, August. [Downloadable!] (restricted)
  4. Kim B. Clark & Richard B. Freeman, 1979. "How Elastic is The Demand for Labor?," NBER Working Papers 0309, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Hicks, John, 1970. "Elasticity of Substitution Again: Substitutes and Complements," Oxford Economic Papers, Oxford University Press, vol. 22(3), pages 289-96, November. [Downloadable!] (restricted)
  6. Sato, Ryuzo & Koizumi, Tetsunori, 1973. "On the Elasticities of Substitution and Complementarity," Oxford Economic Papers, Oxford University Press, vol. 25(1), pages 44-56, March. [Downloadable!] (restricted)
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