The Inconsistency of the Quadratic Mincer Equation: A Proof

Abstract

This paper provides a proof that the well-known quadratic Mincer (1974) Equation, wherein the log of wage or salary is a quadratic function of the years of experience, is inconsistent with the usual assumptions of utility maximization. The proof requires the use of the dynamic version of the Mincer Equation and the assumption of an isoelastic marginal utility function. The result is that a polynomial of degree three or greater is required to relate the log of wage or salary to the number of years of experience

On Aggregating Human Capital Across Heterogeneous Cohorts

“…On the other hand, the approximation quality becomes rather unsatisfactory in the case of the simplified macro-Mincer equation which omits the work experience term x LF , and especially so if the underlying experience coefficient µ is large. 10 In any case, we also find notable discrepancies between macro-and micro-level returns to schooling and work experience, however.…”

Sexual Orientation Wage Gaps across Local Labour Market Contexts: Evidence from Canada

“…The Census does not measure actual work experience, so we construct a Mincer proxy, to represent the potential number of years a respondent could have worked since completion of schooling (measured as Age -Years of Education -6). The Mincer proxy is entered as a quartic function, which better represents the curvilinear relationship between earnings and experience (see Hamlen and Hamlen, 2012;Lemieux, 2006). Labour force participation is measured as annual weeks worked and whether or not the individual usually worked part-time or full-time.…”

Human capital and state income differences in Mexico

“…We include experience to the 1-4 th powers followingMurphy and Welch (1990), as justified inHamlen and Hamlen (2012).…”