Testing the Specification of the Mincer Wage Equation

Christian Belzil ()

No 608, Working Papers from Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure

Abstract: Using panel data taken from the NLSY, I perform the joint estimation of i) a reduced-form dynamic model of the transition from one grade level to the next with observed and unobserved heterogeneity, and ii) a flexible version of the celebrated Mincerian wage equation with skill heterogeneity, non linearity in schooling, non-separability between the effects of schooling and experience and heteroskedasticity (after conditionning on unobserved skills). The model rejects all symplifying assumptions common in the empirical literature. In particular, the log wage regression is highly convex, even after conditionning on unobserved and observed skills. Skill heterogeneity is also found to be over-estimated when non-linearity is ignored. After conditioning on skill heterogeneity, schooling has a positive effect on wage growth.

Keywords: heterogeneity; Mincer regression; random coefficient models; return to experience; returns to education (search for similar items in EconPapers)
JEL-codes: J2 J3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2006-05
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Working Paper: Testing the Specification of the Mincer Wage Equation (2006)
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