Do Mincerian Wage Equations Inform How Schooling Influences Productivity?

Christian Groth () and Jakub Growiec

No 2017/04, EUSP Department of Economics Working Paper Series from European University at St. Petersburg, Department of Economics

Abstract: We study the links between the Mincerian wage equation (the cross-sectional relationship between wages and years of schooling) and the human capital production function (the causal effect of schooling on labor productivity). Based on a stylized Mincerian general equilibrium model with imperfect substitutability across skill types and ex ante identical workers, we demonstrate that the mechanism of compensating wage differentials renders the Mincerian wage equation uninformative for the human capital production function. Proper identification of the human capital production function should take into account the equilibrium allocation of individuals across skill types.

Keywords: Mincerian wage equation; Human capital production function; Skill distribution; Compensating wage differentials; Golden rule of skill formation (search for similar items in EconPapers)
JEL-codes: E24 I26 J24 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2017-07-17
New Economics Papers: this item is included in nep-eff, nep-hrm and nep-mac
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https://eusp.org/sites/default/files/archive/ec_dep/wp/Ec-2017_04.pdf (application/pdf)

Related works:
Working Paper: Do Mincerian wage equations inform how schooling influences productivity? (2018)
Working Paper: Do MincerianWage Equations Inform How Schooling Influences Productivity? (2017)
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