Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Mar, 1979, Volume 47, Issue 2

Components of Variation in Panel Earnings Data: American Scientists 1960-70<437:COVIPE>2.0.CO;2-M
p. 437-454

Lee A. Lillard, Yoram Weiss

This paper is concerned with the sources of variation in the earnings of American scientists over the decade 1960-70. It focuses on sources of variation over time as well as at a point in time. Earnings variation over time is decomposed into sources due to measurable variables representing an earnings function, a random effect individual variance component in the level of earnings, a random effect individual component in earnings growth, and a serially correlated transitory component. Maximum likelihood estimates of the implied parameters are presented and a method for obtaining GLS estimates of the earnings regression function, when the residual variance components are given, is explored.

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