The distribution of lifetime earnings: a problem of intertemporal aggregation

M. M. G. Fase

Statistica Neerlandica, 1972, vol. 26, issue 4, 103-111

Abstract: Summary The main reason to study lifetime earnings as opposed to annual earnings is that the former are purged of life cycle influences. If annual earnings are described by a random variable, it logically follows that lifetime earnings are also random. This paper examines the implications of this statement, starting from the basic assumption that annual earnings of a new entrant to the labor force are a drawing from a two parameter lognormal distribution. It is found that the probability distribution function of lifetime earnings can be derived explicitly if one is willing to define lifetime earnings as a geometric mean.

Date: 1972
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