Separating Uncertainty from Heterogeneity in Life Cycle Earnings
نویسندگان
چکیده
Separating Uncertainty from Heterogeneity in Life Cycle Earnings This paper develops and applies a method for decomposing cross section variability of earnings into components that are forecastable at the time students decide to go to college (heterogeneity) and components that are unforecastable. About 60% of variability in returns to schooling is forecastable. This has important implications for using measured variability to price risk and predict college attendance. JEL Classification: C33, D84, I21
منابع مشابه
Uncertainty in Human Capital Investment and Earnings Dynamics
There is a literature that examines the statistical properties of earnings dynamics by testing heterogeneous growth against random walk. This test is of great consequence because rejection of heterogeneous growth has often been interpreted as rejection of a key role for heterogeneity in human capital investment over the life-cycle. This paper shows that optimal life-cycle investment behavior im...
متن کاملEarnings dynamics and uncertainty in Italy : How do they differ between the private and public sectors ? ♣
This paper uses Italian panel data from the private and public sectors and analyses earnings dynamics by applying the minimum distance estimator of Chamberlain (1984). We consider two main aspects of earnings careers. First, we estimate a measure of earnings growth heterogeneity, whereby quantifying to what extent the two sectors differ in the ability to differentiate remuneration of time-varyi...
متن کاملDynamic Panel Data Models I: Covariance Structures and Autoregressions1 Class Notes
The methods discussed in this note are motivated by an interest in the time series properties of short panels. Such interest may arise for a variety of reasons. We may be interested in separating out permanent from transitory components of variation as in earnings mobility studies. In another type of applications, we may be able to test theories or identify policy parameters from the mapping be...
متن کاملAn empirical analysis of earnings dynamics among men in the PSID: 1968}1989
This study uses data from the Panel Survey of Income Dynamics (PSID) to address a number of questions about life cycle earnings mobility. It develops a dynamic reduced form model of earnings and marital status that is nonstationary over the life cycle. The study reaches several "rm conclusions about life cycle earnings mobility. Incorporating non-Gaussian shocks makes it possible to better acco...
متن کاملAn Empirical Analysis of Income Dynamics Among Men in the PSID: 1968–1989
This study uses data from the Panel Survey of Income Dynamics (PSID) to address a number of questions about life-cycle earnings mobility. It develops a dynamic reduced-form model of earnings and marital status that is nonstationary over the life-cycle. A Gibbs sampling-data augmentation algorithm facilitates use of the entire sample and provides numerical approximations to the exact posterior d...
متن کامل