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Earnings within Education Groups and Overall Productivity Growth

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  • John Laitner

Abstract

To offer a possible interpretation for recent empirical findings on earnings growth, this paper constructs a simple model with endogenous human capital investment, a distribution of natural abilities, and unbiased technological progress. The model predicts that in the long run, average earnings within any education group will grow more slowly than average wages overall. It also predicts that average earnings in high-education groups ultimately will rise relative to average earnings in low-education groups. In the model, these processes do not imply secular increases in the degree of inequality in the overall cross-sectional distribution of earnings.

Suggested Citation

  • John Laitner, 2000. "Earnings within Education Groups and Overall Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 807-832, August.
    • Handle: RePEc:ucp:jpolec:v:108:y:2000:i:4:p:807-832
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    File URL: http://dx.doi.org/10.1086/316101
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    References listed on IDEAS

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    1. Kevin M. Murphy & Finis Welch, 1992. "The Structure of Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 285-326.
    2. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April.
    3. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    4. Peter Gottschalk, 1997. "Inequality, Income Growth, and Mobility: The Basic Facts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 21-40, Spring.
    5. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-867, June.
    6. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 1-34.
    7. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts," NBER Working Papers 6385, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Wei-Bin Zhang, 2013. "Income and Wealth Distribution with Physical and Human Capital Accumulation: Extending the Uzawa-Lucas Model to a Heterogeneous Households Economy," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 50(2), pages 257-287, November.
    2. Bas Straathof, 2005. "Schooling inequality and the rise of research," DEGIT Conference Papers c010_012, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. Tosun, Mehmet Serkan, 2008. "Endogenous fiscal policy and capital market transmissions in the presence of demographic shocks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(6), pages 2031-2060, June.
    4. Hatsor, Limor, 2012. "Occupational choice: Teacher quality versus teacher quantity," Labour Economics, Elsevier, vol. 19(4), pages 608-623.
    5. Wei-Bin Zhang, 2013. "A Synthesis Of The Uzawa-Lucas Model With The Walrasian-General-Equilibrium And Neoclassical-Growth Theories," Economic Annals, Faculty of Economics, University of Belgrade, vol. 58(199), pages 7-38, October -.
    6. Hendricks, Lutz & Schoellman, Todd, 2014. "Student abilities during the expansion of US education," Journal of Monetary Economics, Elsevier, vol. 63(C), pages 19-36.
    7. Gilpin, Gregory & Kaganovich, Michael, 2012. "The quantity and quality of teachers: Dynamics of the trade-off," Journal of Public Economics, Elsevier, vol. 96(3), pages 417-429.
    8. Kitaura, Koji, 2012. "Education, borrowing constraints and growth," Economics Letters, Elsevier, vol. 116(3), pages 575-578.
    9. John Laitner & Dmitriy Stolyarov, 2005. "Technological Progress and Worker Productivity at Different Ages," Working Papers wp107, University of Michigan, Michigan Retirement Research Center.
    10. Keller, Elisa, 2014. "The slowdown in American educational attainment," Journal of Economic Dynamics and Control, Elsevier, vol. 46(C), pages 252-270.
    11. Holtz-Eakin, Douglas & Lovely, Mary E. & Tosun, Mehmet S., 2004. "Generational conflict, fiscal policy, and economic growth," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 1-23, March.

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