1 Introduction
Jacob Mincer’s human capital earnings function (Mincer, 1974) has become the ‘workhorse’ of empirical research into earnings determination (Lemieux, 2006, p.128), and continues to be frequently cited in the literature of labour economics (Teixeira, 2007, p.133). Mincer’s principal insight was to include potential labour market experience in his model, in addition to age and education, as a means to explain earnings by continued investment in human capital after the years of formal education. Human capital research has been challenged on several theoretical and methodological fronts since the 1970s (Teixeira, 2007, pp.62ff) but this paper restricts its comments principally to the recurrent claim that additional variables need to be included in the ‘Mincer Equation’ as control variables in its regression. The current study chooses a set of variables on theoretical grounds and then regresses the dependent variable (earnings) against them. We discuss the model and its findings, and conclude that the effect of education on earnings is limited. We conclude by outlining alternative approaches to studying the relationship between education and earnings.
2 Data and Methods
The dataset is a subset of cross-sectional data from the US National Longitudinal Survey and consists of a sample of 3613 young men surveyed in 1976. The dependent variable (outcome) is earnings, expressed here as a natural log of gross hourly wage in US dollars in 1976 (lnY); the unlogged values are not further considered. The independent variables (predictors) are: number of years of formal education by 1976 (S), the respondent’s age in years in 1976, the number of years education of each of the respondents’ parents, and the respond...
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A college education costs a lot these days, but is a huge investment. The amount of money that the average college graduate earns is much greater than the money that the average high school graduate earns. Over the decades, the education pay gap between the educated, and the ...
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While college may be initially uneconomical, evidence from a 1959 census shows a “three-fourths of earning difference” between those who graduated from college and those who merely received a high school diploma (Weisbrod et al 495). Weisbrod and Karpoff acknowledge the high cost of college in America, but assert the benefits of a college degree will more than reimburse a person in the long run, therefore the initial cost of attending a college is worthwhile. (Weisbrod et. al). Furthermore, this indicates only “one-fourth of the earnings differences are attributed...to non-schooling factors”, which proves the significant role college plays in determining the future earnings of an individual (Weisbrod et. al 497). College appears to be the most influential factor in regards to a person's earnings, therefore according to Weisbrod and Karpoff, college is necessary for a person who wishes to obtain a higher expected income. Even students who attend mediocre to below-average colleges will receive “a lifetime income that is [around] 10 percent lower ...than that which someone at one of the best schools can expect” (Weisbrod et. al 497). Weisbrod and Karpoff contend even low-tier colleges result in higher earnings, therefore a student should strive to attend any college regardless of the
For a unit increase in human capital the wage will increase by 13857 holding all the other variables constant. This further supports the human capital theory that higher education leads to higher financial returns in the job market. Assuming that the reference category for sex is female, males get 17436 more in wages than females. Age however showed to have a positive correlation with wage where for each year increase in age, wage will increase by 6528. This could imply also that experience which comes with wage contributes to higher returns in the job market. When we compare the estimates for Quebec, Alberta, and Ontario, the average wage is decreases by 3060 for residents of Quebec. It increases by 9167 for Ontario, and 12828 for residents of Alberta.
In their article, Owen and Sawhill appeal to ethos by comparing statistics on college graduates’ income to the income of those who did not attend college. One figure Owen and Sawhill present is “research shows that 23- to 25-year-olds with bachelor’s degrees make $12,000 more than high school graduates but by age 50, the gap has grown to $46,500”(641) They
“Nearly half of the people 18-34 without degrees (48%) cannot afford to go to college” (587). High school kids who are wealthier tend
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Rodney K. Smith’s mere opinion of his publication is that children with a higher level are more like to secure a job rather than those with no or little education. His view is upheld by the statistics of bureau that gives a clear statistics of the percentage of the salary earned by students with higher education and that of lower education. This makes his claim more reliable and credible because the bureau of labor and statistics is a reputable institution in the United States that deals with the percentage of people who work in United State. Smith’s own personal anecdote appeals to the feelings of the audience in which it ignites them with feelings of possibility.
Contrary to the expectation that access to college consistently promotes family stability and economic security, deficiencies in policy lead college attendance to have adverse consequences for some families headed
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