Estimating Age-Earnings Profiles: Accounting for Selective Employment and Attrition

This paper tries to understand the selection mechanisms into employment and estimates the age earnings profiles of different groups in the US, accounting for selection. It estimates, using fixed effects, a wage regression equation of log wages as a function of variables that are available whether the individual is observed working or not. Log wages are then imputed to individuals in years they are not observed working. Preliminary results suggest that the selection corrected profile of White men is lower then the observed profile, implying that the individuals not observed working are of lower productivity. On the contrary, the selection corrected profile for women, if statistically different, is higher than the observed profile. The methodology also accounts for attrition under a tighter set of assumptions.

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