IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/0140.html
   My bibliography  Save this paper

A Multiplicative Model of Investment in Human Capital

Author

Listed:
  • Yoram Weiss

Abstract

The purpose of this paper is to analyze the effects of changes in exogenous parameters such as the interest rate, the length of the working period and initial endowments on the shape of the observed earnings profile. Though this problem can be treated in general, we shall restrict ourselves to the following "inverse optimal" problem: find a form of the trade-off function between current and future earnings which leads to a logarithmic earnings function. In the paper we demonstrate that logarithmic earning functions can be derived from optimal behavior. Specifically, the simple case which we analyze leads to piece wise linear log earnings functions. Such a derivation has the advantage that the effects on earnings of exogenous factors can be consistently analyzed. The model is sufficiently simple to allow a clear exposition of the basic elements which govern earnings in a static world. The same elements appear in the more complicated derivations currently available in the literature but it is more difficult to trace their impact. The multiplicative model provides additional information on the robustness of the results previously derived from the Ben-Porath specification. This is particularly important since the "production function" for human capital is not directly observable and alternative specification can only be compared in terms of their implications with respect to observed earnings.

Suggested Citation

  • Yoram Weiss, 1976. "A Multiplicative Model of Investment in Human Capital," NBER Working Papers 0140, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0140
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w0140.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wallace, T D & Ihnen, L A, 1975. "Full-Time Schooling in Life-Cycle Models of Human Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 137-155, February.
    2. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 76-108, Part II, .
    3. Blinder, Alan S & Weiss, Yoram, 1976. "Human Capital and Labor Supply: A Synthesis," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 449-472, June.
    4. 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 549-569, May/June.
    5. Jacob Mincer, 1962. "On-the-Job Training: Costs, Returns, and Some Implications," NBER Chapters, in: Investment in Human Beings, pages 50-79, National Bureau of Economic Research, Inc.
    6. Lee A. Lillard, 1973. "Human Capital Life Cycle of Earnings Models: A Specific Solution and Estimation," NBER Working Papers 0004, National Bureau of Economic Research, Inc.
    7. Haley, William J, 1973. "Human Capital: The Choice Between Investment and Income," American Economic Review, American Economic Association, vol. 63(5), pages 929-944, December.
    8. Brown, Charles, 1976. "A Model of Optimal Human-Capital Accumulation and the Wages of Young High School Graduates," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 299-316, April.
    9. Johnson, Thomas, 1970. "Returns from Investment in Human Capital," American Economic Review, American Economic Association, vol. 60(4), pages 546-560, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lillard, Lee A, 1977. "Inequality: Earnings vs. Human Wealth," American Economic Review, American Economic Association, vol. 67(2), pages 42-53, March.
    2. Lee A. Lillard, 1977. "An Essay on Human Wealth," NBER Chapters, in: Explorations in Economic Research, Volume 4, number 5, pages 702-752, National Bureau of Economic Research, Inc.
    3. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    4. Barry R. Chiswick, 2006. "Jacob Mincer, Experience and the Distribution of Earnings," Springer Books, in: Shoshana Grossbard (ed.), Jacob Mincer A Pioneer of Modern Labor Economics, chapter 10, pages 109-126, Springer.
    5. Arleen Leibowitz, 1974. "Years and Intensity of Schooling Investing," NBER Working Papers 0049, National Bureau of Economic Research, Inc.
    6. repec:eee:labchp:v:1:y:1986:i:c:p:603-640 is not listed on IDEAS
    7. Das, Tirthatanmoy & Polachek, Solomon, 2017. "Micro Foundations of Earnings Differences," IZA Discussion Papers 10922, Institute of Labor Economics (IZA).
    8. Lee A. Lillard, 1974. "The Distribution of Earnings and Human Wealth in Cycle Context," NBER Working Papers 0047, National Bureau of Economic Research, Inc.
    9. Stenberg, Anders & Westerlund, Olle, 2016. "Flexibility at a cost – Should governments stimulate tertiary education for adults?," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 69-86.
    10. Honggao Cao, 2005. "Intergenerational Earnings Mobility: Mechanism and Measurement," Labor and Demography 0501006, University Library of Munich, Germany.
    11. María Arrazola & José de Hevia & Marta Risueño & José Félix Sanz Sanz, 2005. "A proposal to estimate human capital depreciation: some evidence for Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 172(1), pages 9-22, June.
    12. Kevin F. Hallock, 2013. "Data Improvement and Labor Economics," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 1-16.
    13. repec:eee:labchp:v:1:y:1986:i:c:p:525-602 is not listed on IDEAS
    14. Borisov Gleb, 2005. "The human capital heterogeneity at the Russian labor market," EERC Working Paper Series 01-151e, EERC Research Network, Russia and CIS.
    15. Weiss, Yoram & Lillard, Lee A, 1978. "Experience, Vintage, and Time Effects in the Growth of Earnings: American Scientists, 1960-1970," Journal of Political Economy, University of Chicago Press, vol. 86(3), pages 427-447, June.
    16. Nirav Mehta, 2022. "A Partial Identification Approach to Identifying the Determinants of Human Capital Accumulation: An Application to Teachers," CESifo Working Paper Series 9681, CESifo.
    17. Bertil Holmlund & Qian Liu & Oskar Nordström Skans, 2008. "Mind the gap? Estimating the effects of postponing higher education," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 683-710, October.
    18. Edward N. Wolff & Dennis M. Bushe, 1976. "Age, Education and Occupational Earnings Inequality," NBER Working Papers 0149, National Bureau of Economic Research, Inc.
    19. Lee A. Lillard, 1977. "The Distribution of Earnings and Human Wealth in a Life-Cycle Context," NBER Chapters, in: The Distribution of Economic Well-Being, pages 557-620, National Bureau of Economic Research, Inc.
    20. Burhanettin Kuruscu, 2006. "Training and Lifetime Income," American Economic Review, American Economic Association, vol. 96(3), pages 832-846, June.
    21. Yoram Weiss, 1975. "The Earnings of Scientists, 1960-1970: Experience, Age and Vintage Effects," NBER Working Papers 0099, National Bureau of Economic Research, Inc.
    22. Kinvi D.A. Logossah, 1994. "Capital humain et croissance économique : une revue de la littérature," Économie et Prévision, Programme National Persée, vol. 116(5), pages 17-34.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0140. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.