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

In 1958 Jacob Mincer pioneered an important approach to understand earnings distribution. In the years since Mincerís 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 oneís 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 Mincerís original discovery. In addition, this paper provides new empirical evidence regarding Mincerís concept of the ďovertaking ageĒ Ė a topic not currently well explored in the literature. In this latter vein, the paper shows that Mincerís 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