Dynamic returns to schooling by work experience

Marconi, Gabriele (2015): Dynamic returns to schooling by work experience.

Abstract

This paper investigates the effect of education on the rate of growth of a worker’s salary for workers with different levels of work experience. Two alternative models of the earnings curve are presented, the Mincer model and a model with wage premia that change over the course of a workers’ career. Then, I derive analytically the coefficients that would be obtained by estimating these two models with a dynamic panel data model in which earnings are a function of schooling and past earnings. Finally, I estimate these coefficients empirically using data from the German Socio-Economic Panel. The results indicate that the coefficients for schooling and lagged wage in a dynamic panel data model of the earnings curve display substantial variation by work experience, which seems more consistent with the dynamic wage premium model than with the Mincer model.

• Item Type: MPRA Paper
• Language: English
• Keywords: earnings curve – wage – work experience – dynamic panel data model – lagged dependent variable
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I21 - Analysis of Education; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials

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