EconPapers    
Economics at your fingertips  
 

Heterogeneity in the Dynamics of Labor Earnings

Martin Browning and Mette Ejrnæs

Annual Review of Economics, 2013, vol. 5, issue 1, 219-245

Abstract: In this article, we survey the literature on individual earnings dynamics with a particular focus on allowing for pervasive heterogeneity across individuals. We structure the discussion around ARMA processes with nonlinear trends for each individual. We show that allowing for pervasive and codependent heterogeneity in individual parameters has a major impact on econometric modeling, estimation, and substantive conclusions. We describe an econometric method that is suitable for models with pervasive heterogeneity. We develop a long list of statistics that describe any earnings panel in great detail and provide a demanding set of features of the data for fitting. This list encompasses most moments used in the literature and provides novel statistics based on individual regressions. Finally, we present an empirical illustration using a long Danish panel. Based on this, we provide some conclusions concerning earnings dynamics but emphasize that details will vary according to the sample.

Keywords: ARMA; simulated minimum distance; codependent heterogeneity; panel data (search for similar items in EconPapers)
JEL-codes: J31 C23 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.annualreviews.org/doi/abs/10.1146/annurev-economics-081512-134514 (application/pdf)
Full text downloads are only available to subscribers. Visit the abstract page for more information.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anr:reveco:v:5:y:2013:p:219-245

Ordering information: This journal article can be ordered from
http://www.annualreviews.org/action/ecommerce

Access Statistics for this article

More articles in Annual Review of Economics from Annual Reviews Annual Reviews 4139 El Camino Way Palo Alto, CA 94306, USA.
Bibliographic data for series maintained by http://www.annualreviews.org ().

 
Page updated 2020-04-09
Handle: RePEc:anr:reveco:v:5:y:2013:p:219-245