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- Title
Earnings Inequality Across Labor Markets: A Test of the Human Capital Model.
- Authors
Hirsch, Barry T.
- Abstract
This study examines the ability of the simple human capital model to explain earnings inequality among white males in 48 medium-to-large-sized Standard Metropolitan Statistical Areas (SMSAs) in 1969. Data are from the 1/100 file of the 1970 Census. The sample is restricted to white, non-student, non-farm males between the ages of 15 and 64 with some earnings in 1969.[3] <BR> The simple human capital model, as developed by Chiswick and Mincer, relates earnings inequality to the levels, dispersions, and intercorrelations of schooling, experience, weeks worked, and the parameters of the earnings function. Estimation of earnings functions using individual data within each of 48 SMSAs allows us to specify a priori the values of the model's coefficients, thus providing a rigorous test of the simple model. The hypothesis that all of the coefficients of the model are as predicted is not accepted at a .05 significance level, but cannot be rejected at a .01 level. The human capital framework does prove to be a particularly useful framework by which to analyze the major determinants of earnings inequality. Findings here call into question the results of previous studies which have found increased levels of schooling and of income to have a direct equalizing effect on the size distribution. The evidence presented in this paper also illustrates the importance of accounting for inter-area differences in earnings function parameters in economic analyses of inequality.
- Subjects
UNITED States; INCOME inequality; LABOR market
- Publication
Southern Economic Journal, 1978, Vol 45, Issue 1, p32
- ISSN
0038-4038
- Publication type
Article
- DOI
10.2307/1057614