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Dynamic returns to schooling by work experience

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  • Marconi, Gabriele

Abstract

This paper investigates the effect of education on the rate of growth of a worker’s salary for workers with different levels of work experience. Two alternative models of the earnings curve are presented, the Mincer model and a model with wage premia that change over the course of a workers’ career. Then, I derive analytically the coefficients that would be obtained by estimating these two models with a dynamic panel data model in which earnings are a function of schooling and past earnings. Finally, I estimate these coefficients empirically using data from the German Socio-Economic Panel. The results indicate that the coefficients for schooling and lagged wage in a dynamic panel data model of the earnings curve display substantial variation by work experience, which seems more consistent with the dynamic wage premium model than with the Mincer model.

Suggested Citation

  • Marconi, Gabriele, 2015. "Dynamic returns to schooling by work experience," MPRA Paper 88073, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88073
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    References listed on IDEAS

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    More about this item

    Keywords

    earnings curve – wage – work experience – dynamic panel data model – lagged dependent variable;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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