Abstract
Some recent studies have debated the appropriateness of semi-log earnings function in approximating actual earnings profiles. This study contributes further to this debate by estimating four specifications of earnings function, namely, semi-log quadratic, semi-log cubic, quadratic and cubic with cross section data for 4035 full-time urban male earners in Iran for 1993. The analysis shows that the semi-log quadratic earnings function fits the actual empirical earnings profiles very poorly. The quadratic earnings function provides a much better approximation to the actual earnings. Measures of out-of-sample prediction errors also show the superiority of quadratic function over others.
| Original language | English |
|---|---|
| Pages (from-to) | 11-21 |
| Number of pages | 11 |
| Journal | Applied Economics |
| Volume | 33 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2001 |
| Externally published | Yes |