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Please use this identifier to cite or link to this item: http://arks.princeton.edu/ark:/88435/dsp01gq67jr18n
 Title: Matching, Human Capital, and the Covariance Structure of Earnings Authors: Parent, Daniel Keywords: matchinghuman capitalcovariance structure of residualsmethod of moments Issue Date: 1-Nov-1995 Series/Report no.: Working Papers (Princeton University. Industrial Relations Section) ; 351 Abstract: Using method of moments techniques (ref: Chamberlain (1984), Gallant and Jorgenson (1979)), this paper’s objective is to test the predictions of the theory of job-matching and the theory of human capital pertaining to the covariance structure of residuals from a typical Mincer log earnings equation. The selection process implicit to job matching is such that we should observe a decrease in the contribution of the variance of the job-match component when we follow the workers as they acquire tenure in their job. Results are generally in agreement with these predicted patterns, especially in the case of more educated workers. On the other hand, if jobs are considered as pure experience goods, the predicted increase in the variance at the start of the employment relationship is not supported by the data, except perhaps for less educated workers. Turning next to human capital theory, the predicted tradeoff between the job-speciﬁc intercept and slope parameters is strongly supported by the data, especially in the case of workers having at least a High School diploma. URI: http://arks.princeton.edu/ark:/88435/dsp01gq67jr18n Appears in Collections: IRS Working Papers

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