TY - UNPB

T1 - Do Mincerian Wage Equations Inform How Schooling Influences Productivity?

AU - Groth, Christian

AU - Growiec, Jakub

PY - 2017

Y1 - 2017

N2 - 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.

AB - 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.

KW - Faculty of Social Sciences

KW - Mincerian wage equation

KW - human capital production function

KW - skill distribution

KW - compensating wage differentials

KW - golden rule of skill formation

M3 - Working paper

T3 - University of Copenhagen. Institute of Economics. Discussion Papers (Online)

BT - Do Mincerian Wage Equations Inform How Schooling Influences Productivity?

ER -