Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/170906 
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers No. 10922
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper examines how human capital based approaches explain the distribution of earnings. It assesses traditional, quasi-experimental, and new micro-based structural models, the latter of which gets at population heterogeneity by estimating individual-specific earnings function parameters. The paper finds one's ability to learn and one's ability to retain knowledge are most influential in explaining earnings variations. Marketable skills actually acquired in school depend on these two types of ability. However, schools may also implement ability enhancing interventions which can play a role in improving learning outcomes. Policy initiatives that improve these abilities would be a possible strategy to increase earnings and lower earnings disparity.
Subjects: 
earnings distribution
human capital
heterogeneity
ability
JEL: 
I3
J3
J7
Document Type: 
Working Paper

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