The latter variation in average age corresponds roughly to the age range around the peak of the age-earnings profiles
shown in Figure 1 above.
Contrast these market-driven age-earnings profiles
with that of teachers, whose salaries are determined not so much by market forces but by collectively bargained agreements.
Drawing on both theory and empirical evidence, with particular attention to differences in savings rates and in age-earnings profiles
and to uncertainty about future wage rates, they conclude that there should be some role for including capital income as a part of the tax base and they lean toward relating marginal tax rates on capital and labor incomes rather than the Nordic dual tax.
Simulating career age-earnings profiles
for both markets, we find that the earnings gap widens with experience for relatively productive research economists and may even narrow with age for relatively less productive research economists.
The major problem is that longitudinal data are not available over a long enough period to determine the age-earnings profiles
However, the age-earnings profiles
in the 1990s and into the new century appear to indicate a slow erosion of the higher level of earnings for the older age group in teaching compared to the alternative occupation.
Some of the same incentives posed by the Lazear model also exist in the forced-saving model of rising age-earnings profiles
Although these data are cross-sectional, one can infer lifetime age-earnings profiles
14) It is interesting to note that although there are significant differences in compensation for workers in different sectors, yet the age-earnings profiles
follow the life-cycle pattern in all three sectors of employment where income increases with age for some time, reaches the peak and then declines.
were based on the following algorithm:
Lazear's work includes studies on employee incentives, such as piece rates, age-earnings profiles
, profit-sharing, and career prospects.
First, for all three data sets, we estimated age-earnings profiles