A Two-Tiered Earnings Frontier Estimation of Employer and Employee Information in the Labor Market

2008

FNT in Microeconomics

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Earnings Over the Lifecycle: The Mincer Earnings Function and Its Applications *In 1958 Jacob Mincer pioneered an important approach to understand how earnings are distributed across the population. In the years since Mincer's seminal work, he as well as his students and colleagues extended the original human capital model, reaching important conclusions about a whole array of observations pertaining to human well-being. This line of research explained why education enhances earnings; why earnings rise at a diminishing rate throughout one's life; why earnings growth is smaller for those anticipating intermittent labor force participation; why males earn more than females; why whites earn more than blacks; why occupational distributions differ by gender; why geographic and job mobility predominate among the young; and why numerous other labor market phenomena occur. This paper surveys the answers to these and other questions based on research emanating from Mincer's original earnings function specification. JEL Classification:J1, J3, J7

Section: Incomplete Informationmentioning

confidence: 99%

Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications

2008

FNT in Microeconomics

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“…Schmidt, 1977) to Mincer earnings functions to separate observed wage dispersion into purely random variation (noise in the data), variation due to incomplete employee information, and variation due to incomplete employer information (Solomon Polachek and Bong Yoon, 1987). To get at these facets, simply estimate Mincer's earnings function with an error term containing three components …”

Section: One Can Apply Frontier Estimation (Dennis Aigner C a K Lmentioning

confidence: 99%

Mincer's Overtaking Point and the Life Cycle Earnings Distribution

Review of Economics of the Household

2003

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor, (2) internationalization of labor markets, (3) welfare state and labor market, (4) labor markets in transition countries, (5) the future of labor, (6) evaluation of labor market policies and projects and (7) general labor economics. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available on the IZA website (www.iza.org) or directly from the author. In the years since Mincer's seminal work, he as well as his students and colleagues extended the original human capital model, reaching important conclusions about a whole array of observations pertaining to human wellbeing. This line of research explained why education enhances earnings; why earnings rise at a diminishing rate throughout one's life; why earnings growth is smaller for those anticipating intermittent labor force participation; why men earn more than women; why whites earn more than blacks; why occupational distributions differ by gender; why geographic and job mobility predominate among the young; why unemployment is lower among the skilled; and why numerous other labor market phenomena occur. This paper surveys the answers to these and other questions based on research emanating from Mincer's original discovery. In addition, this paper provides new empirical evidence regarding Mincer's concept of the "overtaking age" -a topic not currently well explored in the literature. In this latter vein, the paper shows that Mincer's original finding of a U-shaped (log) variance of earnings over the life cycle i...

“…Because one residual is positive ( * ) and one is negative ( ), specification (15) is known as a two-tiered frontier, but it differs from (Polachek and Yoon, 1987) because * contains a groupspecific parameter, and thus, as just mentioned, is not identically distributed. This makes estimation more complicated.…”

Section: Empirical Specificationmentioning

confidence: 99%

“…Of the other two, one is positive and depicts the proportion entering the labor force; the other is negative and depicts the proportion leaving the labor market. Each of the latter two components is estimated via a modified version of the two-tiered frontier estimation model (Polachek and Yoon, 1987). Unlike the typical iid three-error component two-tier frontier model, the equation's error components are independent but not identically distributed.…”

Section: Introductionmentioning

confidence: 99%

Estimating labor force joiners and leavers using a heterogeneity augmented two-tier stochastic frontier

Das

Journal of Econometrics

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Estimating Labor Force Joiners and Leavers Using a Heterogeneity Augmented Two-Tier Stochastic Frontier jANuAry 2017Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This leads to a complex nonlinear likelihood function requiring identification through a two-step estimation procedure, which we estimate using Current Population Survey (CPS) data. By transforming the basic equation linking labor force participation to the working age population, this paper devises a new method which can be used to identify labor market joiners and leavers. The method's advantage is its parsimonious data requirements, especially alleviating the need for survey based longitudinal data. JEL Classification:C23, C51, J21