July 2007

IZA DP No. 2897: A Dynamic Mincer Equation with an Application to Portuguese Data

published in: Applied Economics, 2010, 42 (16), 2091-2098

This paper argues in favor of a dynamic specification of the Mincer equation, where past observed earnings play the role of additional explanatory variable for current observed earnings. A dynamic approach offers an explanation why the return to schooling in terms of observed earnings is not independent of labor-market experience, as suggested by some recent empirical evidence for the United States.