TY  - RPRT
        AU  - Richter, Wolfram F.
        TI  - Mincer Equation, Power Law of Learning, and Efficient Education Policy
        PY  - 2013/Mar/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 7280
        UR  - https://www.iza.org/index.php/publications/dp7280
        AB  - The basis for the empirical research on earnings determination is the Mincer equation. Individuals are assumed to make schooling decisions by maximizing earnings. Leisure costs of schooling and labour supply are neglected which has some empirically implausible implications. This paper shows a way of deriving a Mincer-type earnings function from the more standard assumption of utility maximization. The implications are less questionable. The approach allows one to analyse the efficiency of education policy in Ramsey's tradition. Distortive wage taxation is shown to provide reason for subsidizing education in effective terms. Second-best policy is confronted with empirical evidence on OECD countries.
        KW  - Mincer equation
KW  - earnings determination
KW  - maximizing utility vs. earnings
KW  - power law of learning
KW  - second-best taxation in Ramsey's tradition
KW  - education elasticity rule
        ER  -