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The Canadian earnings functions under test

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  • Ather Akbari
  • Tomson Ogwang

Abstract

Many Canadian studies continue to use Mincer's basic post-schooling earnings function to analyse labour market earnings of individuals. Several policy recommendations are based on these analyses. The underlying assumptions in these studies are that the Mincer's specification of earnings model is correct and that the error terms of these models are normally distributed and homoscedastic. By performing several tests on four cross-sectional Canadian data sets ranging from 1981 to 1991, the present study confirms previous suggestions in literature that the standard Mincer specification of earnings model should not be adopted without testing. The hypotheses of a correctly specified functional form, and of the normality and homoscedasticity of errors, are rejected for all the data sets used in this study. These results question the validity of past policy recommendations based on Mincer type earnings functions in Canada.

Suggested Citation

  • Ather Akbari & Tomson Ogwang, 1997. "The Canadian earnings functions under test," Applied Economics Letters, Taylor & Francis Journals, vol. 4(2), pages 133-139.
  • Handle: RePEc:taf:apeclt:v:4:y:1997:i:2:p:133-139
    DOI: 10.1080/758526712
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    Cited by:

    1. Naderi, A. & Mace, J., 2003. "Education and earnings: a multilevel analysis: A case study of the manufacturing sector in Iran," Economics of Education Review, Elsevier, vol. 22(2), pages 143-156, April.
    2. Ather H. Akbari & Naeem Muhammed, 2000. "Educational Quality and Labour Market Performance in Developing Countries: Some Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 417-439.

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