Forecasted earnings for the latter two groups were based on median 2017 weekly earnings for Hispanics at these two educational levels obtained from the Bureau of Labor Statistics (BLS) and estimated age-earnings profiles
for these educational levels.
Yet, the reforms will affect public sector employees of both sexes differently as, for instance, the effect of switching from final salary to career average Defined Benefit (DB) schemes will depend on the steepness of the particular age-earnings profiles
. Moreover, the different public sector pension schemes face heterogeneous change (e.g.
In response to these concerns, OACT generated hypothetical workers with a more realistic lifetime age-earnings profiles
. However, SSA altered its replacement rate methodology and calibrated the earnings of its hypothetical workers with the explicit intent of maintaining the average 40 percent replacement rate that was calculated using the outmoded pre-2002 methodology.
For our analysis of children's future earnings as adults, we also include some additional terms to address lifecycle bias as described by Haider and Solon (2006) that arises due to heterogeneous age-earnings profiles
. First, we include an interaction of log earnings in each lifecycle stage j, with a quartic in the parent's age (at the time of the child's birth) less 40.
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.
This study evaluates these conflicting views by investigating the effect of ADEA on faculty age-earnings profiles
. The analysis employs exogenous variation in state mandatory retirement laws for faculty to identify the causal effect of the policy.
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.
Schaafsma and Sweetman (2001) show that those who immigrate at a younger age have higher age-earnings profiles
than older immigrants, particularly those over 35 years.
Whether there are direct incentives to treat workers differentially based on their age depends on the "correct" model of the age-earnings profile
. Some of the same incentives posed by the Lazear model also exist in the forced-saving model of rising age-earnings profiles