Jacob Mincer

On-the-Job Training: Costs, Returns, and Some Implications

IN TIHE context of the economists concern with education as a process of investment in manpower, it is important to be reminded that formal school instruction is neither an exclusive nor a sufficient method of training the labor force. Graduation from some level of schooling does not signify the completion of a training process. It is usually the end of a more general and preparatory stage, and the beginning of a more specialized and often prolonged process of acquisition of occupational skill, after entry into the labor force. This second stage, training on the job, ranges from formally organized activities such as apprenticeships and other training programs2 to the in-

Unemployment Effects of Minimum Wages

Empirical investigation of employment effects of minimum wage legislation is a subject of continuing interest, judging by a growing number of studies. The older studies were concerned mainly with changes in employment in low-wage industries. In the more recent work, attention has shifted to effects on unemployment in low-wage demographic groups, such as teenagers. Despite the statistical difference there is no apparent recognition of a conceptual as well as substantive distinction between minimum wage effects on employment and those on unemployment. The purpose of this paper is to explore the analytical distinction between employment and unemployment effects in the hope of providing some understanding of the observations. Though related empirical work is far from being definitive the findings appear to be informative.

Wage structures and labor turnover in the United States and Japan

Abstract The starting point of this study is the proposition that intensive formation of human capital on the job is the basic proximate reason for the strong degree of worker attachment to the firm in Japan. The greater emphasis on training and retraining, much of it specific to the firm, results also in steeper wage trajectories, due to growth of skills in the firm. Several previous studies viewed the differences between Japanese and U.S. labor markets in the light of the same hypothesis. We explore this insight more thoroughly by a detailed use of microdata for the two countries: we measure wage profiles and turnover in age groups and we test the inverse relation between the two on industry sectors within each of the countries. Numerical estimates of this relation permit us to conclude that as much as two-thirds of the differential in turnover between the two countries is explainable by the differences in the steepness of the profiles. The question remains why the emphasis on human capital formation on the job is so much greater in Japan than in the United States. Our answer is that such emphasis is conditioned by rapid economic growth. More specifically, Japanese labor policies in the firm represent adjustments of worker skills and activities to the very rapid technological changes of the past decades. Using productivity growth indexes for industries in the United States and Japan we test the hypothesis that rapid technical change, which induces greater and continuous training, is in part responsible for steeper profiles and for lesser turnover. The hypothesis is confirmed on the sectoral level in both countries. We conclude that differences in productivity growth between the United States and Japan account for up to 80% of the differences in the steepness of wage profiles, and indirectly for the differences in turnover. Finally, we try to standardize for the cultural background of workers, by observing a sample of Japanese plants in the United States which employ American workers and use Japanese labor policies in recruitment and training. We find that the steeper tenure-wage slopes and lower turnover place this sample closer to Japan than to the United States—about two-thirds of the distance.

Intercountry Comparisons of Labor Force Trends and of Related Developments: An Overview

This paper is a survey of analyses of womens labor force growth in 12 industrialized countries, originally presented at a conference in Sussex, England, in June 1983. The main focus of the conference papers and of the current survey is on growth of the labor force of married women in the years 1960-80. Trends in fertility, wages, and family instability also receive attention as related developments. Married womens labor force growth is observed in all countries, except for the USSR after 1970, where labor force rates of women reached the level of men. Growth rates differ among countries. They apparently respond to growth in real wages and to growth in education, but response elasticities differ among countries. Estimates of these elasticities contained in the country papers were helpful in predicting the trends. Other findings include ubiquitous declines in fertility and growth of divorce in the 1970s. Both developments are related to long-run labor force growth. In all countries, wages of women were lower than wages of men. The 1960 average gap of 38% narrowed to 29% in 1980. Factors related to these trends, including public policy, are discussed in the survey.

Wage Changes in Job Changes

This is a study of short and longer-runwage gains observed in moving from one job (firm) to the next. Short-run wage gains are defined as wage changes over the survey year bracketing the move minus the opportunity cost of moving. The latter is measured by waqe growth of a subgroup of stayers whose mobility behavior and other charactristics are the same as of the current period movers. Longer-run wage gains are defined as the difference in wages between two successive jobs at the same tenure levels, net of experience, again net of opnortunity costs. Wage gains of movers are generally positive, except for layoffsof older workers. A large part of the gain is due to the lesser wage growth on the job of movers compared to (all) stayers. This is consistent with below average amounts of on the job training observed for movers compared to all workers. Wage gains of quits exceed those of layoffs, despite similar wage levels and wage growth on the preceding job. Wage gains of older movers are smaller compared to gains of younger movers, both in quits and in layoffs. Differences in search conditions and in the nature of separations help to explain these findings.

An Exchange: The Theory of Human Capital and the Earnings of Women: Women's Earnings Reexamined

This study relies on Brazilian census data from 1960-2000 to analyze long-term trends in racial and gender wage disparities in the urban labor market of Sao Paulo, one of Latin Americas most dynamic economies. Afro-Brazilians and women have made ...

Changes in Wage Inequality, 1970-1990

Differences in wages between skill groups declined in the 1970s and rose in the 1980s, but aggregate wage inequality grew throughout the period. This divergence remains a puzzle in recent studies of U.S. wage inequality. In this paper the sometimes divergent paths of inter-group and intra-group inequality are explained by the human capital approach. In it, wages are the return on cumulated human capital investments. In turn, interpersonal distributions of investments and of marginal rates of return on them are determined by individual supply and demand curves. Recent studies have shown that relative growth of human capital supply in the 1970s and of demand in the 1980s generated the U-shaped time pattern of ( differentials. Argument and evidence in this paper show that a widening of dispersion among individual demand curves started in the 1970s and generated a continuous expansion of ( group demand curves reflects a growing skill bias in the demand for labor. Aggregate inequality grew throughout the period because within group inequality accounts for the larger part of total inequality. The data also indicate that wage inequality grew in the face of stability in the dispersion of human capital and despite the likely decline in inequality of opportunity, as reflected in the decline in dispersion among supply curves.

Investment in U.S. Education and Training

The current high rates of return to human capital stimulate a supply response via increased investments in education and training. The so increased human capital stock exerts downward pressures on the rates of return that reduce the skill differential in wages. This paper reports estimates of: the responses of investments in post-secondary education, measured by enrollments, to changes in the rate of return; responses of investment in job training, measured by incidence; and effects of accumulated human capital stocks, measured by educational attainment, on educational wage differentials. Enrollment responses and attainment effects are shown to be separated by a time lag of about a decade. The parameter estimates are based on annual CPS and NCES data, covering a recent 25 year period. If demands for human capital cease their acceleration, the rate of return is expected to decline about 25% over the current decade, judging by the estimated parameters and lags.

Wage Structures and Labor Turnover in the U.S. And in Japan

The starting point of this study is the proposition that intensive formation of human capital on the job is the basic proximate reason for the strong degree of worker attachment to the firm in Japan. The greater emphasis on training and retraining, much of it specific to the firm, results also in steeper wage trajectories, due to growth of skills in the firm. We explore this insight more thoroughly by a detailed use of micro-data for the two countries: We measure wage profiles and turnover in age groups, and we test the inverse relation between the two on industry sectors within each of the countries. Using productivity growth indexes for industries in the U.S. and in Japan we test the hypothesis that rapid technical change which induces greater and continuous training, is responsible for steeper profiles, hence indirectly for lesser turnover. The hypothesis is confirmed on the sectoral level in both countries. Finally, we try to standardize for the cultural background of workers, by observing a sample of Japanese plants in the U.S. which employ American workers, and use Japanese labor policies in recruitment and training. We find that the steeper tenure-wage slopes and lower turnover place this sample closer to Japan than to the U.S.

The Production of Human Capital and the Life of Earnings

After a brief summary of Ben Poraths 1967 model approach, I enquire into the empirical validity and some implications of his insights. Section 2 is an attempt to answer the question: Are the shapes and magnitudes of growth in wage profiles largely attributable to human capital investments? Section 3 tests the proposition that over the working age capacity wages (i.e. wages before netting out investment) decline before observed wages do. Implied timing of labor supply provides the test. The findings shed light on developments in the U.S. labor market in the past several decades. In section 4 some implications are drawn from Ben-Poraths model for interpersonal differences and historical changes in life-cycle human capital investments. The positive correlation between schooling and training, predicted by the model is found in cross-sections. It also shows up in parallel movements in schooling and training in the 1980s as the demand for human capital increased. Once again, observed U.S. patterns are highlighted.