Econometrica Vol. 48 No. 4 1980
The Fine Structure of Earnings and the On-the-Job Training Hypothesis
Abstract
[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.]
- DOI
- 10.2307/1912945
- Volume
- 48
- Issue
- 4
- Pages
- 1013
- Sources
- bibtex:phds-export.bib crossref openalex