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 ''modulus'', a measure. Models c ...

that explains

wage A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as ''minimum wage'', '' prevailing wage'', and ''yearly bonuses,'' and remune ...

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-oriente ...

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 Tomasz� ...

. 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 polynomial is a polynomial of degree two in one or more variables. A quadratic function is the polynomial function defined by a quadratic polynomial. Before 20th century, the distinction was unclear between a polynomia ...

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 Return may refer to: In business, economics, and finance * Return on investment (ROI), the financial gain after an expense. * Rate of return, the financial term for the profit or loss derived from an investment * Tax return, a blank document or t ...

to schooling and experience, respectively.

Sherwin Rosen Sherwin Rosen (September 29, 1938 – March 17, 2001) was an American labor economist. He had ties with many American universities and academic institutions including the University of Chicago, the University of Rochester, Stanford University a ...

, 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