Determinants of Earnings: A Commentary on Mincer’s Earning Function

Sherwin Rodel, Homobono Arvin

Abstract


The factors that determines the amount of wages of earnings that a person gets remains an advancing area of continuous research since the birth of modern economics and industrialization. Wages are important to workers since it is the single largest source of income and livelihood for many employees. Recently most trade unions have expanded their purview to other areas of employee right protection but in the past  the main role of these unions were to fight income exploitation and other forms of distributive injustice in wages and salaries administration by employers. Despite the expanding role of trade unions today, issues about employee compensation still dominate labour economic and labour relations issues across the world. The state is also very interested in issues regarding the wages and salaries since it has political, micro economic and macroeconomic effect on the economy. This may explain the reason for the proliferation of numerous studies that have explored the specific determinants of wages. One of such models is the ground breaking work of Mincer who proposed that the level of education and experience in the labour market affects the amount of wages or income earned by a person based on US Census data In this study, the objective is to explore the generalisability of “Mincerian equation” within contemporary business environment. This is done by empanelling and analyzing an ensemble of data collected from diversified workforce (educational level and work experience) to determine the effect of these variables on the wages and income earned over a period of time.


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