Experience, Vintage and Time Effects in the Growth of Earnings: AmericanScientists, 1960-1970
This paper is concerned with the growth of individual earnings over time. Four aspects of time are distinguished: experience, age, vintage and calendar year. The first section of the paper provides a brief outline of a theory of planned growth in earnings. The second and main section of the paper is devoted to an empirical attempt to estimate the role of experience, vintage and age on the growth in earnings and to separate these effects from exogenous changes in market conditions. We present a detailed specification of the earnings function which accounts for the inherent multi-collinearity between variables such as time, vintage and experience. One of our main objectives is to point out the implications of this identification problem for the analysis of earnings data. Though we cannot completely eliminate this difficulty, longitudinal data, which follows the same individuals over a period of time, allows us to identify more aspects of time than one could obtain from a single cross section. We provide a descriptive analysis of the exogenous changes in market conditions occurring during the period. No attempt is made to relate them to causal changes, such as past and expected future enrollment and government research grants. We find two basic tendencies: (1) Over the decade as a whole, scientists in academic institutions enjoyed better market conditions and thus a higher growth rate than those employed in private industry. (2) Toward the end of the decade, there is a marked reduction in the market's contribution to the growth rate. In some fields, such as physics, we note an actual reduction in the real earnings of new entrants. We conclude with a brief discussion of the changes in relative earnings over the decade by field and type of employer.
|Date of creation:||May 1976|
|Date of revision:|
|Publication status:||published as Weiss, Yoram and Lee A. Lillard. "Experience, Vintage, And Time Effects In The Growth Of Earnings: American Scientists 1960-1970," Journal of Political Economy, 1978, v86(3), 427-448.|
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- Johnson, George E & Stafford, Frank P, 1974. "Lifetime Earnings in a Professional Labor Market: Academic Economists," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 549-69, May/June.
- Welch, Finis, 1973. "Black-White Differences in Returns to Schooling," American Economic Review, American Economic Association, vol. 63(5), pages 893-907, December.
- Alan S. Blinder & Yoram Weiss, 1975.
"Human Capital and Labor Supply: A Synthesis,"
NBER Working Papers
0067, National Bureau of Economic Research, Inc.
- Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
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