[The fine structure of earnings is defined by a theoretically meaningful decomposition of the covariance matrix of earnings (or log earnings) time series. A three-element variance components model is proposed for analyzing earnings of young workers. These components are interpreted as the effects of differential on-the-job training (OJT) and differential economic ability. Several properties of these components and relationships between them are deduced from the OJT model. Background noise generated by a nonstationary first-order autoregressive process, with heteroscedastic innovations and time-varying AR parameters is also assumed present in observed earnings. ML estimates are obtained for all parameters of the model for a sample of Swedish males. The results are consistent with the view that the OJT mechanism is an empirically significant phenomenon in determining individual earnings profiles.]

Although welfare change measurements based on consumers' surplus concepts are widely employed in empirical studies, economists have been unable to achieve a satisfactory professional consensus on the theoretical basis, the role of approximations, and the appropriate scope and interpretation of such measurements. This paper attempts to provide a reasonably precise and comprehensive statement of the central ideas, techniques, and formulas that underlie current welfare change measurement. Traditional consumers' surplus techniques are replaced by the expenditures function, since the latter provides a rigorous theoretical resolution to defects of consumers' surplus in analyzing income effects. The paper also attempts to clarify several issues in dealing with simple intertemporal comparisons.