Figure 13.1 illustrates two typical age-earnings profiles for individuals with different levels of education. These profiles define the typical pattern of earnings over time, and are usually derived by examining averages across individuals in surveys. Two aspects are clear: people with more education not only earn more, but the spread tends to grow with time. Less educated, healthy young individuals who work hard may earn a living wage but, unlike their more educated counterparts, they cannot look forward to a wage that rises substantially over time. More highly-educated individuals go into jobs and occupations that take a longer time to master: lawyers, doctors and most professionals not only undertake more schooling than truck drivers, they also spend many years learning on the job, building up a clientele and accumulating expertise.
Individuals with a higher level of education earn more than individuals with a ‘standard’ level of education. In addition, the differential grows over time.
Age-earnings profiles define the pattern of
earnings over time for individuals with different characteristics.
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