Expected Work Experience: A New Human Capital Measure

28 Pages Posted: 22 Feb 2019

See all articles by Joseph E. Zveglich

Joseph E. Zveglich

Asian Development Bank; Harvard University

Yana van der Meulen Rodgers

Rutgers, The State University of New Jersey

Editha Laviña

Asian Development Bank

Date Written: January 22, 2019

Abstract

Work experience is a key variable in earnings function estimates and wage gap decompositions. Because data on actual work experience are rare, studies commonly use proxies, such as potential experience. But potential experience is identical for all individuals of the same age and level of education, so it ignores labor market intermittency because of childbirth and child-rearing—a critical omission when analyzing gender differences in earnings. This paper constructs a better proxy: expected work experience—the sum of the annual probabilities that an individual worked in the past. This measure can be generated using commonly available data on labor force participation rates by age and gender to gauge the probability of past work. Applying the measure to labor force survey data from the Philippines shows that conventional proxies underestimate the contribution of gender differences in work experience in explaining the gender wage gap.

Keywords: gender wage gap, labor force participation, Philippines, potential experience, wage regressions

JEL Classification: J16, J24, J31, O15, O53

Suggested Citation

Zveglich, Joseph E. and Rodgers, Yana van der Meulen and Laviña, Editha, Expected Work Experience: A New Human Capital Measure (January 22, 2019). Asian Development Bank Economics Working Paper Series No. 570 (January, 2019). Available at SSRN: https://ssrn.com/abstract=3339203 or http://dx.doi.org/10.2139/ssrn.3339203

Joseph E. Zveglich (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines
(632) 632-5507 (Phone)

Harvard University ( email )

Littauer Center
Cambridge, MA 02138
United States

Yana van der Meulen Rodgers

Rutgers, The State University of New Jersey

311 North 5th Street
New Brunswick, NJ 08854
United States

Editha Laviña

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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