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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Marshall (2005) identifies that “financial inequality” is not the solitary cause of “social inequality”, but it is often related. She suggests education plays a significant role in ‘class stratification’. Marshall (2005: p1), Part 2:
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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
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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.
Once attained, a college degree will enable individual to earn more in the long run. In fact, the rate of return on investment in higher education is substantial enough to warrant the financial burden often associated with the pursuit of a college degree. On the whole, college graduates earn more than those with only a high school diploma. According to the National Center for Education Statistics, the median annual income in 1999 of male high school graduates working full-time and year round was $33,184 and $23,061 for female-full-time workers. However, the average incomes in 1999 for males with a bachelor degree were $52,985 and $37,993 for females. This demonstrates the drastic disparity in earnings between individuals with college educations and those with only high school diplomas. The U.S. census Bureau has determined that each successively higher education level attained is associated with an increase in earnings. Over an adult 's working life, high school graduates earn an average of $1.2 million, those with associate degrees earn approximately $1.6 million, and individuals with bachelor 's degrees earn about $2.1 million. When the necessary financial burden of pursuing higher education is put in comparison to the differences in wages related to level of education outlined above, the true economic value of college education is certainly put into perspective. Moreover, higher learning leads to higher earning. Beyond increased income potential, graduates from college educations also experience several other benefits compared to those with only high school diplomas. These benefits include longer life spans, better access to health care, better dietary and health practices, greater economic stability and security, and less dependency on government assistance. College education has also been linked to greater use of seat belts, more continuing education, greater attendance at live performances,
In our society today, money is a controlling factor is just about everything so earning high wages is imperative. With the abundance of personal development in a plethora of fields, it is no surprise that college students “made 40 percent more than those with only a high school diploma”, and that “last year, the gap reached 83 percent” (Source D). It was also reported by the U.S Census Bureau that “annual earnings between a high school and college graduate [was] $19,550”, (Source F) meaning that graduates make on average twenty thousand more. Because there is a “vast unfilled need for college graduates” (Source C), they are in high demand in all fields of work, assuring that jobs will always be available. “College graduates...are also far less likely to be unemployed than non employees” (Source D). With the awareness that they make considerable wages and have impressive job security, graduates are enabled to live uncomplicated lives. Their roads are smooth and clear. The quality of life that many individuals are used to in America is reliant of a high steady income and those with the knowledge that college provides are better equipped to meet these
Costs and benefits of college differ across individuals and, therefore, it is important to consider the ‘worth’ of college on a case-by-case basis. The earnings associated with a college degree will be different for each individual as people differ in the way they are affected by higher education. Individuals also differ with respect to the costs of college. If we assume that each individual is aware of his or her benefits and costs, individuals would simply weigh the returns of the college investment against the costs. The returns consist of the value of lifetime earnings associated with a college degree, while the costs consist of both direct costs, such as tuition, and the indirect cost of living while in college. The balance of imbalance between these things would help determine if one has made the right decision or
Subjects talked about incorporate the advantages, costs and financial return of school training, examination for compensation of school graduates, and the ramifications of rising educational cost and falling wages for the estimation of school instruction (Abel, Jaison R., and Richard Deitz. "Do The Benefits Of College Still Outweigh The Costs?." Current Issues In Economics & Finance 20.3 (2014): 1-12. Academic Search Alumni Edition. Web. 1 May
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ASCD. Dan Laitsch"The Effect of Employment on Student Outcomes in High School and Beyond." Research Brief (2005): N.P.
These individuals with low aptitudes are deserted, as there is more focus on highly skilled laborers. In the study the authors conceptualize a model that focuses on workers ' efficiency, depending on skills and human capital connected with job training, and this lays ground to further understand how minimum wage influences job training. Organizations seek to leverage the increase in wages by focusing on training incentives for those who bring better 'return '. Low wage workers may tend to transition over occupations more frequently than other laborers and this results to wage growth for those earning minimum wage.