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Matching, Human Capital, and the Covariance Structure of Earnings

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  • Daniel Parent

Abstract

Using method of moments techniques (ref: Chamberlain (1984), Gallant and Jorgenson (1979)), this paper's objective is to test the predictions of the theory of job-matching and the theory of human capital pertaining to the covariance structure of residuals from a typical Mincer log earnings equation. The selection process implicit to job matching is such that we should observe a decrease in the contribution of the variance of the job-match component when we follow the workers as they acquire tenure in their job. Results are generally in agreement with these predicted patterns, especially in the case of more educated workers. On the other hand, if jobs are considered as pure experience goods, the predicted increase in the variance at the start of the employment relationship is not supported by the data, except perhaps for less educated workers. Turning next to human capital theory, the predicted trade-off between the job-specific intercept and slope parameters is strongly supported by the data, especially in the case of workers having at least a High School diploma. Par le biais de la méthode des moments (réf.: Chamberlain (1984), Gallant et Jorgenson (1979)) et avec des données non balancées du NLSY, cette étude cherche à tester les prédictions engendrées par la théorie du matching ainsi que la théorie du capital humain quant à la structure de covariance des résidus d'une équation de salaire typique à la Mincer. Le processus de sélection qu'implique le matching fait en sorte que l'on devrait observer une diminution de la contribution du terme reflétant la variance dans la qualité du match lorsque l'on suit les travailleurs à mesure qu'ils acquièrent de l'ancienneté dans leur emploi. Les résultats corroborent cette prédiction surtout pour les travailleurs plus scolarisés. Par contre, dans la version pure experience good de la théorie, la prédiction à l'effet que la variance devrait s'accroître au tout début de la relation d'emploi s'avère

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Bibliographic Info

Paper provided by Princeton University, Department of Economics, Industrial Relations Section. in its series Working Papers with number 730.

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Date of creation: Nov 1995
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Handle: RePEc:pri:indrel:dsp01gq67jr18n

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Keywords: matching; human capital; covariance structure of residuals; method of moments;

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References

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