The Effect of Demographic Factors on Age-Earnings Profiles

42 Pages Posted: 7 Jul 2004

See all articles by Richard B. Freeman

Richard B. Freeman

National Bureau of Economic Research (NBER); University of Edinburgh - School of Social and Political Studies; Harvard University; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: February 1979

Abstract

The age-earnings profile of male workers is significantly influenced by the age composition of the workforce. When the number of young workers increased sharply in the 1970s, the profile "twisted" against them, apparently because younger and older male workers are imperfect substitutes in production. The effect is especially marked among college graduates. By contrast, the age-earnings profile of female workers appears to be little influenced by the age composition of the female workforce, possibly because the intermittent work experience of women makes younger and older women closer substitutes in production. The dependence of the age-earnings profile on demographically induced movements along a relative demand schedule suggests that standard human capital models of the profile, which posit that earnings rise with age and experience solely as a result of individual investment behavior, are incomplete.

Suggested Citation

Freeman, Richard B., The Effect of Demographic Factors on Age-Earnings Profiles (February 1979). NBER Working Paper No. w0316. Available at SSRN: https://ssrn.com/abstract=260497

Richard B. Freeman (Contact Author)

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