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Experience, Vintage and Time Effects in the Growth of Earnings: AmericanScientists, 1960-1970

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  • Yoram Weiss
  • Lee A. Lillard

Abstract

This paper is concerned with the growth of individual earnings over time. Four aspects of time are distinguished: experience, age, vintage and calendar year. The first section of the paper provides a brief outline of a theory of planned growth in earnings. The second and main section of the paper is devoted to an empirical attempt to estimate the role of experience, vintage and age on the growth in earnings and to separate these effects from exogenous changes in market conditions. We present a detailed specification of the earnings function which accounts for the inherent multi-collinearity between variables such as time, vintage and experience. One of our main objectives is to point out the implications of this identification problem for the analysis of earnings data. Though we cannot completely eliminate this difficulty, longitudinal data, which follows the same individuals over a period of time, allows us to identify more aspects of time than one could obtain from a single cross section. We provide a descriptive analysis of the exogenous changes in market conditions occurring during the period. No attempt is made to relate them to causal changes, such as past and expected future enrollment and government research grants. We find two basic tendencies: (1) Over the decade as a whole, scientists in academic institutions enjoyed better market conditions and thus a higher growth rate than those employed in private industry. (2) Toward the end of the decade, there is a marked reduction in the market's contribution to the growth rate. In some fields, such as physics, we note an actual reduction in the real earnings of new entrants. We conclude with a brief discussion of the changes in relative earnings over the decade by field and type of employer.

Suggested Citation

  • Yoram Weiss & Lee A. Lillard, 1976. "Experience, Vintage and Time Effects in the Growth of Earnings: AmericanScientists, 1960-1970," NBER Working Papers 0138, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0138
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    References listed on IDEAS

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    1. Blinder, Alan S & Weiss, Yoram, 1976. "Human Capital and Labor Supply: A Synthesis," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 449-472, June.
    2. David Levhari, 1966. "Extensions of Arrow's "Learning by Doing"," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 33(2), pages 117-131.
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    5. K. J. Arrow, 1971. "The Economic Implications of Learning by Doing," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 11, pages 131-149, Palgrave Macmillan.
    6. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 352-352.
    7. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
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    Cited by:

    1. Weiss, Yoram & Fershtman, Chaim, 1998. "Social status and economic performance:: A survey," European Economic Review, Elsevier, vol. 42(3-5), pages 801-820, May.
    2. Huggett, Mark & Ventura, Gustavo & Yaron, Amir, 2006. "Human capital and earnings distribution dynamics," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 265-290, March.
    3. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-959, July.
    4. Block, Steven A. & Kiess, Lynnda & Webb, Patrick & Kosen, Soewarta & Moench-Pfanner, Regina & Bloem, Martin W. & Peter Timmer, C., 2004. "Macro shocks and micro outcomes: child nutrition during Indonesia's crisis," Economics & Human Biology, Elsevier, vol. 2(1), pages 21-44, March.
    5. van Kippersluis, Hans & Van Ourti, Tom & O'Donnell, Owen & van Doorslaer, Eddy, 2009. "Health and income across the life cycle and generations in Europe," Journal of Health Economics, Elsevier, vol. 28(4), pages 818-830, July.
    6. Thomas J. Kniesner & W. Kip Viscusi & Christopher Woock & James P. Ziliak, 2012. "The Value of a Statistical Life: Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 74-87, February.
    7. Paul W. Miller, 1989. "Low‐Wage Youth Employment: A Permanent or Transitory State?," The Economic Record, The Economic Society of Australia, vol. 65(2), pages 126-135, June.
    8. Bruce A. Weinberg & David W. Galenson, 2019. "Creative Careers: The Life Cycles of Nobel Laureates in Economics," De Economist, Springer, vol. 167(3), pages 221-239, September.
    9. Kapteyn, Arie & Alessie, Rob & Lusardi, Annamaria, 2005. "Explaining the wealth holdings of different cohorts: Productivity growth and Social Security," European Economic Review, Elsevier, vol. 49(5), pages 1361-1391, July.
    10. Audra J. Bowlus & Chris Robinson, 2012. "Human Capital Prices, Productivity, and Growth," American Economic Review, American Economic Association, vol. 102(7), pages 3483-3515, December.
    11. Benjamin Balsmeier & Maikel Pellens, 2016. "How much does it cost to be a scientist?," The Journal of Technology Transfer, Springer, vol. 41(3), pages 469-505, June.
    12. Zeynep Elitas & Hakan Ercan & Semih Tumen, 2015. "Reassessing the trends in the relative supply of college-equivalent workers in the U.S.: a selection-correction approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(2), pages 249-273, June.
    13. André Masson, 1983. "Profils d'accumulation patrimoniale et modèles de cycle de vie," Revue Économique, Programme National Persée, vol. 34(1), pages 10-63.
    14. Mark Huggett & Gustavo Ventura & Amir Yaron, 2011. "Sources of Lifetime Inequality," American Economic Review, American Economic Association, vol. 101(7), pages 2923-2954, December.
    15. Clifford Clogg, 1982. "Cohort Analysis of Recent Trends in Labor Force Participation," Demography, Springer;Population Association of America (PAA), vol. 19(4), pages 459-479, November.
    16. Weinberg, Bruce A., 2004. "Experience and Technology Adoption," IZA Discussion Papers 1051, Institute of Labor Economics (IZA).
    17. Richard Blundell & James P. Ziliak & Hugo Lopez, 2023. "Labour market inequality and the changing life cycle profile of male and female wages," IFS Working Papers W23/16, Institute for Fiscal Studies.
    18. David J Deming & Kadeem Noray, 2020. "Earnings Dynamics, Changing Job Skills, and STEM Careers," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(4), pages 1965-2005.
    19. Weiss, Yoram, 1981. "Output Variability, Academic Labor Contracts and Waiting Times for Promotion," Foerder Institute for Economic Research Working Papers 275344, Tel-Aviv University > Foerder Institute for Economic Research.
    20. Paul Miller & Paul Volker, 1993. "Youth Wages, Risk, and Tertiary Finance Arrangements," The Economic Record, The Economic Society of Australia, vol. 69(1), pages 20-33, March.
    21. repec:eee:labchp:v:1:y:1986:i:c:p:603-640 is not listed on IDEAS
    22. Robert E. Lucas Jr., 2015. "Human Capital and Growth," American Economic Review, American Economic Association, vol. 105(5), pages 85-88, May.
    23. Neuman, Shoshana & Weiss, Avi, 1995. "On the effects of schooling vintage on experience-earnings profiles: Theory and evidence," European Economic Review, Elsevier, vol. 39(5), pages 943-955, May.
    24. George J. Borjas & Jacob Mincer, 1976. "The Distribution of Earnings Profiles in Longitudinal Data," NBER Working Papers 0143, National Bureau of Economic Research, Inc.
    25. Bloemen, Hans & Kalwij, Adriaan S., 2001. "Female labor market transitions and the timing of births: a simultaneous analysis of the effects of schooling," Labour Economics, Elsevier, vol. 8(5), pages 593-620, December.

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