We develop a model of earnings and apply it to an examination of the effect of lifelong learning on men’s wages. Using data from the British Household Panel Survey, a variant of the mover-stayer model is developed in which hourly wages are either taken from a stationary distribution (movers) or closely related to the hourly wage one year earlier (stayers). Mover-stayer status is not observed, and we therefore model wages using an endogenous switching regression, estimated by maximum likelihood. Methodologically, the results support the mover-stayer characterisation since the restrictions required for the simpler specifications popular in the literature are rejected. Substantively, simulation of the estimated model shows some statistically significant effects from acquiring qualifications of a higher level than those previously held, but not from acquiring qualifications of the same level.
Dorsett, R., Lui, S and Weale (2016) The effect of lifelong learning on men’s wages. Empirical Economics 15(2): 737-762. PDF – gated
Economic and Social Research Council
Part of the programme of research carried out by the ESRC-funded LLAKES centre