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IZA
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Mincer's Overtaking Point and the Lifecycle Earnings Distribution
by
Solomon Polachek
(August 2003)
published in: Review of Economics of the Household, 2003, 1 (4), 273-304
Abstract:
In 1958 Jacob Mincer pioneered an important approach to understand earnings distribution.
In the years since Mincer’s seminal work, he as well as his students and colleagues extended
the original human capital model, reaching important conclusions about a whole array of
observations pertaining to human wellbeing. This line of research explained why education
enhances earnings; why earnings rise at a diminishing rate throughout one’s life; why
earnings growth is smaller for those anticipating intermittent labor force participation; why
men earn more than women; why whites earn more than blacks; why occupational
distributions differ by gender; why geographic and job mobility predominate among the
young; why unemployment is lower among the skilled; and why numerous other labor market
phenomena occur. This paper surveys the answers to these and other questions based on
research emanating from Mincer’s original discovery. In addition, this paper provides new
empirical evidence regarding Mincer’s concept of the “overtaking age” – a topic not currently
well explored in the literature. In this latter vein, the paper shows that Mincer’s original finding
of a U-shaped (log) variance of earnings over the life cycle is upheld in recent data, both for
the U.S. as well as at least seven other countries.
Text: See Discussion Paper No. 865
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