The Mincer earnings function is a single-equation

model A model is an informative representation of an object, person, or system. The term originally denoted the plans of a building in late 16th-century English, and derived via French and Italian ultimately from Latin , . Models can be divided in ...

that explains

wage A wage is payment made by an employer to an employee for work (human activity), work done in a specific period of time. Some examples of wage payments include wiktionary:compensatory, compensatory payments such as ''minimum wage'', ''prevailin ...

income as a

function Function or functionality may refer to: Computing * Function key, a type of key on computer keyboards * Function model, a structured representation of processes in a system * Function object or functor or functionoid, a concept of object-orie ...

of schooling and experience. It is named after

Jacob Mincer Jacob Mincer (July 15, 1922 – August 20, 2006), was a father of modern labor economics. He was Joseph L. Buttenwieser Professor of Economics and Social Relations at Columbia University for most of his active life. Biography Born in Tomaszó ...

. Thomas Lemieux argues it is "one of the most widely used models in empirical economics". The equation has been examined on many datasets. Typically the logarithm of earnings is modelled as the sum of years of education and a

quadratic function In mathematics, a quadratic function of a single variable (mathematics), variable is a function (mathematics), function of the form :f(x)=ax^2+bx+c,\quad a \ne 0, where is its variable, and , , and are coefficients. The mathematical expression, e ...

of "years of potential experience".Lemieux, Thomas. (2006
"The 'Mincer equation' Thirty Years after ''Schooling, Experience, and Earnings''"
in ''Jacob Mincer: A Pioneer of Modern Labor Economics'', Shoshanna Grossbard, ed., Springer: New York. pp. 127–145. :

\ln w = f (s, x) = \ln w_0 + \rho s + \beta_1 x + \beta_2 x^2

Where the variables have the following meanings;

w

is earnings (the intercept

w_0

is the earnings of someone with no education and no experience);

s

is years of schooling;

x

is years of potential labour market experience. The parameters

\rho

, and

\beta_

\beta_

can be interpreted as the returns to schooling and experience, respectively. Sherwin Rosen, in his article celebrating Mincer's contribution, memorably noted that when data was interrogated using this equation one might describe them as having been ''Mincered''.

References

Further reading