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Do MincerianWage Equations Inform How Schooling Influences Productivity?

Author

Listed:
  • Christian Groth

    (Department of Economics, University of Copenhagen)

  • Jakub Growiec

    (SGH Warsaw School of Economics)

Abstract

We study the links between the Mincerian wage equation (the crosssectional relationship between wages and years of schooling) and the human capital production function (the causal effect of schooling on labor productivity). Based on a stylized Mincerian general equilibrium model with imperfect substitutability across skill types and ex ante identical workers, we demonstrate that the mechanism of compensating wage differentials renders the Mincerian wage equation uninformative for the human capital production function. Proper identification of the human capital production function should take into account the equilibrium allocation of individuals across skill types.

Suggested Citation

  • Christian Groth & Jakub Growiec, 2017. "Do MincerianWage Equations Inform How Schooling Influences Productivity?," Discussion Papers 17-12, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:1712
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    References listed on IDEAS

    as
    1. Growiec, Jakub & Groth, Christian, 2015. "On aggregating human capital across heterogeneous cohorts," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 21-38.
    2. N/A, 2000. "At a Glance," National Institute Economic Review, National Institute of Economic and Social Research, vol. 174(1), pages 2-2, October.
    3. N/A, 2000. "At a Glance," National Institute Economic Review, National Institute of Economic and Social Research, vol. 172(1), pages 2-2, April.
    4. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    5. N/A, 2000. "At a Glance," National Institute Economic Review, National Institute of Economic and Social Research, vol. 171(1), pages 2-3, January.
    6. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    7. Benjamin F. Jones, 2008. "The Knowledge Trap: Human Capital and Development Reconsidered," NBER Working Papers 14138, National Bureau of Economic Research, Inc.
    8. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Mincerian wage equation; human capital production function; skill distribution; compensating wage differentials; golden rule of skill formation;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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