Jacob Mincer

Jacob A. Mincer ( 15. July 1922 in Poland - 20th August 2006 ) was an American economist. He was one of the founders of modern empirical labor market economics .

His research work focuses in particular on the relationship between training, technical progress and wage developments. The Mincer income equation or human capital income function is still one of the fundamental instruments of empirical economics.

Life

Jacob Mincer was born in Poland in 1922 and attended the Technical University in Brno, Czechoslovakia, at the age of 16. Due to the occupation of the country ("smashing the rest of the Czech Republic") by the German Reich in spring 1939, he had to give up his studies. He was also imprisoned in prisons and concentration camps for several years during the Second World War. After the war he got a job with the US military government in Germany because of his excellent language skills. In 1948, a Hillel Foundation scholarship for World War II survivors gave him a visa to enter the United States to study at Emory University in Atlanta. Since his academic achievements were largely recognized, he received his first degree after just two years and then continued his business studies at the University of Chicago. It was there that he met his wife Flora, with whom he moved to New York in 1951 and had three children. In 1957 he received his doctorate from Columbia University, New York, and taught there with only brief interruptions until his retirement in 1991. In 1974 he was elected to the American Academy of Arts and Sciences , and in 2000 to the National Academy of Sciences .

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His authoritative work Schooling, Experience and Earnings (1974) highlighted the importance of human capital investment in explaining various patterns of income inequality and wage growth. Mincer also demonstrated the empirical importance of skill complementarity by showing that more educated workers invest more in post-school education. Mincer's income function is considered a milestone for the interpretation of income data and is still widely used in many sub-disciplines of economics or serves as the basis for many empirical studies in the field of educational and labor market economics.

In the basic model, the Mincer income function is a simple regression analysis estimating function for the relationship between the logarithmized wage as a dependent variable, an additional year of education or, alternatively, as a dummy variable, the achievement of the next higher qualification and professional experience in the square as explanatory variables. By taking the logarithm of the wage, an approximately normal distribution can be produced. This has the advantage that the coefficients can be interpreted as percentage changes when the value of an independent variable increases by a marginal unit. Work experience is squared in order to take account of the devaluation of human capital due to aging and technical progress or falling wages from the age of 50. The disturbance term (residual) depicts unobserved and difficult to measure factors such as volition, motivation, intelligence as well as physical and psychological performance, which also influence individual income and are not controlled by the explanatory variables. A further development of the function with additional explanatory factors such as gender or nationality is possible in principle, but at the same time increases the demands on the data sets used. The Mincer income function is estimated using the least squares method. A straight line is calculated that runs as close as possible to the data points or minimizes the distances. The use of the Mincer income function is suitable for analyzing time series, age and cohort effects. The econometric approach measures the real contribution of education to gross income by controlling other factors that affect income. A disadvantage of these calculations is that direct costs of training, such as tuition fees, are not included. Opportunity costs, such as lost income during the training period, cannot be taken into account either. They can only be indirectly derived from the number of school years. Another problem with the Mincer approach is that instead of actual work experience, only potential work experience is recorded. For this purpose, the age at the end of the training is subtracted from the current age and the result is included in the calculations as potential work experience. Frictions such as periods of unemployment due to unemployment, parenting or caring for relatives in need are thus not taken into account, which leads to distortions in returns.

Mincer's further work on the topics of employment dynamics, company-specific training, investment reaction to technical progress and the recent rise in wage inequality within economic areas enrich the basic models.

Honors

The Jacob Mincer Prize was named after him.

literature

• J. Mincer: Schooling, Experience, and Earnings. National Bureau of Economic Research, New York 1974, ISBN 0-87014-265-8 .
• US economist Jacob Mincer receives IZA Prize in Labor Economics - Highly endowed award for pioneer in labor market research. In: IZA COMPACT. October 2002, p. 3. (ftp.iza.org)
• Nicole Buschle, Carsten Haider: About the economic benefits of education - approaches to calculating returns on education. In: Economy and Statistics. November 2013. (destatis.de)