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Empirical earnings functions for Iran

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  • Satya Paul
  • Ahmad Assadzadeh

Abstract

Some recent studies have debated the appropriateness of semi-log earnings function in approximating actual earnings profiles. This study contributes further to this debate by estimating four specifications of earnings function, namely, semi-log quadratic, semi-log cubic, quadratic and cubic with cross section data for 4035 full-time urban male earners in Iran for 1993. The analysis shows that the semi-log quadratic earnings function fits the actual empirical earnings profiles very poorly. The quadratic earnings function provides a much better approximation to the actual earnings. Measures of out-of-sample prediction errors also show the superiority of quadratic function over others.

Suggested Citation

  • Satya Paul & Ahmad Assadzadeh, 2001. "Empirical earnings functions for Iran," Applied Economics, Taylor & Francis Journals, vol. 33(1), pages 11-21.
    • Handle: RePEc:taf:applec:v:33:y:2001:i:1:p:11-21
    DOI: 10.1080/00036840122017
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