Skip navigation
Please use this identifier to cite or link to this item:
Title: Matching, Human Capital, and the Covariance Structure of Earnings
Authors: Parent, Daniel
Keywords: matching
human capital
covariance structure of residuals
method 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.
Appears in Collections:IRS Working Papers

Files in This Item:
File Description SizeFormat 
351.pdf2.9 MBAdobe PDFView/Download

Items in Dataspace are protected by copyright, with all rights reserved, unless otherwise indicated.